First Time Buyer Mortgages

Mortgage Lenders

Lenders tend to be banks, building societies and other specialist finance companies. They work directly and through a range of intermediaries such as agents or brokers. With so many other businesses, including supermarkets and insurance companies now offering competitive mortgage deals, what mortgage deal you are looking for depends on the best lender.

Qualifying for a Mortgage

Many factors affect the amount you can borrow and the interest you pay. Property buyers will need a certified or self-certified source of income. A deposit can be important but is not always necessary. The lender will obtain a credit check. The credit check involves calculating your credit rating. This shows lenders how risky it will be to give you a personal loan. When a lender requests a credit check, it stays noted on your credit rating by the credit reference agency.  As well, it will be noted in any future credit checks. A good credit history can help obtain better terms, conditions, and interest rates.

Mortgage Deposit

Not all mortgages require capital deposits. There are mortgage lenders that offer 100% Mortgages with a number of attached conditions and terms. However, having a capital deposit can make lower interest repayments and overall mortgage repayment time. It may be worthwhile to build up a capital deposit before going through with a home mortgage.

Borrowing Amount

Mortgage lenders promote maximum borrowing amounts based on an income multiplier. Values are normally set between 2.5 and 5. The joint income of a couple can also be used for borrowing, with a separate multiplier for joint incomes.

Fees

Fees vary depending on the mortgage lender. Some common fees include:

Early Repayment Charge – If a mortgage is repaid before a specified period.

Final Repayment Charge – A fee applied on the last payment before the mortgage is completely repaid.

Total Cost of a Mortgage

The total cost of a mortgage is the product of interest repayments, total capital borrowing, and any management fees charged by the mortgage lender. Interest payments can be estimated using a mortgage calculator. You will have to ask your lender about management fees. The total cost of a mortgage will increase the longer the repayment period and the amount borrowed. A larger deposit or early overpayments can significantly decrease the overall cost of a mortgage over its term.

Considerations

Before looking for a house, you have to understand how much you can afford. Make sure you are realistic when working out exactly how much you can spend on your new house. Older homes may require extensive work such as re-flooring or rewiring. There is much more to a mortgage than just the selling price. Make sure that you factor in all possible expenses with the mortgage before signing the contract.