A Simple Guide for First Time Buyers


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Our guide outlines some key information that will help you on your journey to owning your first home.

As a first time buyer, taking your first step onto the property ladder can be daunting, there's so many things to think about when your considering to take your first step onto the property ladder but we can make things simpler for you.

We hope this guide gives you some of the key information you need to help you on your journey but don't worry we're here to help you through this just send us a message and we'll get in touch to help you into your new home.

A simple guide for first time buyers

We'll go through a summary of the key things you need to know about owning your own home, however you can can also download our more detailed guide here.

Your Deposit

One of the first things you need to do is save for a deposit. Its possible to get a mortgage with just 5% deposit but the higher your deposit the more likely you'll be able to get a better interest rate.

If your looking at a property valued at £200,000 with a 5% deposit you'll need to save £10,000. This means you will need to borrow £190,000. However if you can save more then we'll be able to look at a wider and cheaper range of products for you.

Some common mortgage types

Repayment Mortgages

This is the most common type of mortgage - your payment each month covers the interest and reapyment of part of the capital you have borrowed.  If you have met all your monthly payments, the mortgage is guaranteed to be repaid by the end of the term.

Interest Only Mortgages

Your payment each month only covers the interest being charged against the capital you have borrowed.  At the end of the term you wil still have to pay off the capital you have borrowed.  These mortgages will require the borrower to have some form of plan in place to pay back the capital.

Fixed Rate Mortgages

The rate of interest you pay is fixed for a period of years, typically 2 to 5 years.  This allows your monthly payment to be the same for the duration of the fixed rate.  You are usually locked with early repayment penalties if you pay off or move your mortgage.

You can, in most cases, make overpayments (usually up to 10% of the mortgage each year) without paying a penalty.

Tracker Rate Mortgages

These mortgages move inline with another interest rate, usually the Bank of England base rate.  If the base rate changes by 0.25% so does your mortgage interest rate.  Normally these are for shorter length in general such as 18 months, 2 or 3 years but you can sometime find them for longer durations.

Again you could be locked into this product with early repayment charges if you want to change your dela before the end of the tracker period.

Standard Variable Mortgages

Each Lender has a Standard variable rate ( SVR) which generally follows and is usually much higher than the Bank of England base rate.  When you your introductory rate expires the mortgage will normally revert to standard variable rate.  These rates will vary between lenders and therefore it is vitally important to speak with us to avoid your mortgage payment increasing.

Discounted Rate Mortgages

This is a discount on the standard variable rate for a certain period.  As the Standard variable rate change so will the discounted rate meaning your mortgage payment can still vary.

Capped Rate Mortgages

This is also a variable rate but with an upper limit or "cap".  The rate moves in line with the bank of England base rate. Capped rates are not presently common but there may be some mortgage that still have this.

Affordable home-buyer schemes to get you on to the property ladder

We have a dedicated section that you can find here for Help to Buy schemes where we cover this in detail and also information on schemes such as Guarantor Mortgages that can help you make your first purchase.

These schemes are great to help you get started if you meet the criteria but they often come with conditions that you and your family will need to consider if you choose to go down this route.

How much can you borrow?

One of the most important things that we suggest before taking your first steps towards buying your first home is to make sure you can afford the payments not just not but also if things (interest rates) change in the future. 

We can help you work out your budget and undertake affordability checks to see how much you can borrow and what your monthly payments could be.

Mortgage Lenders will check your income and expenses and "stress test" this against increases in interest rates or change in circumstances such as starting a family and will undertake credit checks. 

Don't worry this all sounds quite daunting and stressful but The Mortgage Stop will guide you through each step of the process.

Don't forget your other costs as well!

Its not just your deposit you need to plan for when buying your first home.  There are other costs that you need to consider when looking to purchase a property:

  • Solicitor / Conveyancing Costs
  • Nearly all mortgage's will require you to under take a survey
  • Building Insurance (and we recommend contents insurance)
  • Mortgage arrangement fees charged by most lenders
  • Removal costs
  • Don't forget to save money for furnishings!
  • Stamp Duty if the value of your property is above certain thresholds

Your home may be repossessed if you do not keep up repayments on your mortgage

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