A guide to mortgages for first-time buyers
The maze of confusion always surrounds home buying for the first time, and most of the applicants are ignorant about the procedures involved. A right type of assistance can ease the stress. Mortgage brokers know everything about the market, and they have a large panel of lenders. Shine Mortgages, an online broker has everything you need in the name of assistance to buy your first home.
Get affordable deal options from our extensive panel of 90+ lenders with 100% LTV available. Their deals are equipped with additional features like instant approval decision, simple procedures, flexible repayment plans and much more. Shine Mortgages also provides insurance to secure your repayments. We have renowned insurance companies connected with us to deliver the best services to our customers.
How a mortgage broker can help first home buyers
The mortgage industry is usually unknown for home buyers, especially first-time home buyers. Their need to borrow funds always accompanies countless doubts. The lengthy process that confronts the buyers or borrowers is not easy to tackle, and people need assistance. Brokers can offer that assistance with overall support that a person needs to buy his very first home. Shine Mortgages, an online broker does the same with no compromise in perfection.
Usually, buyers have many questions like-
- How to find a lender?
- Is the lender reliable?
- How much to borrow? Etc.
A mortgage broker can help to tackle all the stress and mess on the part of the mortgage in varied ways.
Support you all the way to your first home
Yes exactly, from the first step of applying for a mortgage to getting the funds disbursed and finally attaining the house keys, broker stays with you all the way. A broker has to work in coordination with many involved in the deal. The buyer, his solicitor, seller and the lender and makes sure that all work effectively to get things done on time. For the well-being of its customer, the borrowers ensure the perfection and clear all the doubts across the way.
Explains the cost and process
The cost and process part is always confusing for the borrowers. A broker clarifies all the necessary aspects and makes the struggle for a mortgage easy for the fund seeker. It provides a clear picture to facilitate a better understanding of both the cost and the procedure.
A BROKER MAKES YOU FAMILIAR WITH THE FOLLOWING THINGS
|Arrangement fee||Credit score requirement of the lenders|
|Booking fee||Documents required|
|Possibilities of tax deduction||Application procedure|
|Mortgage cost||The estimated time in the process|
|Freehold or leasehold cost||Formalities after approval|
|Stamp duty||Aspects related to funding disbursement|
Help you get pre-approval
It is essential to secure an approval beforehand to remove all the insecurities against the last-minute chaos. With the help of a broker, an applicant gets the pre-approval and ensures a secure financial back-up for the big purchase.
- Broker scrutinises the finances of the applicant to suggest the necessary improvements for the smoother approval. For example, – the applicant may need to act more punctual in debts and bill payments.
- Bargain with the lender to get you an affordable rate quote which facilitates fast pace towards approval.
- Work even on bank holidays for unhampered support. Shine Mortgages is available for you in the same manner.
How Can You Go for First Time Buyer Mortgages
The marketplace does offer you different mortgages deals and Shine Mortgages, to help for first time buyers, explaining those here:
- Joint Mortgage
If you find your deposit and the borrowed amount is not sufficient to climb the property ladder, you may opt for this sort of mortgage. Under this scheme, you can convince your friend, family member or a partner to become your co-borrower. Once they agree, they can add more value to the deposit and help you to get the large amount for availing a mortgage loan.
- Shared ownership
This sort of mortgage also helps first time home buyer. If your annual income is less than £60,000, then you can look upon this option. You need to borrow mortgage for a specific percentage of a property and rest of the amount will bear by the landlord or government.
- Guarantor mortgage
Bring out a guarantor that maybe your parents, family member, colleague or friend. Applying for this mortgage helps a lot, as you can take out a larger mortgage for your very first home, and if you miss the repayments, the guarantor will take such responsibility.
How much can I borrow?
Your possibilities to borrow a particular amount depend on the health of your personal finances. A bunch of factors work to decide what is going to be the final amount that a lender can lend to you. However, the policies of the mortgage companies also matter a lot in the final decision.
A FIRST TIME BUYER CAN BORROW 5 TIMES OF HIS INCOME.
- Your monthly income is £8000
- So, the amount you can borrow is 5 times of £8000, i.e. £40,000
HOWEVER, DO NOT FORGET TO PAY HEED TO THE IMPORTANT ELEMENTS THAT PLAY DECISIVE ROLE. CONDITIONS OF THE BORROWER AND THE POLICIES OF THE LENDER PLAY A DECISIVE ROLE.
|Factors relate to borrower||Factors related to the lender|
|Credit score||Offered LTV|
|Recent financial behaviour||Policies on credit history and credit score|
|Current income and ratio with debts||Maximum loan amount according to the particular financial situation of the borrower|
|Employment stability||Interest rate|
How do I compare mortgage for first-time buyers?
Comparison is always the best way to know which deal is best for you. For that, you need some aspects on which you can base your comparison and know which one is more promising and which one is not. Here are a few essential points on which you can create a contrast between the available options.
The lender has a low-interest rate
Of course, after all, it is all about the cost game. Interest rate dominates the total cost of the mortgage deal and lowers it is, better it is. The best way to know how suitable a lender is in the rate quote is to compare it with the base rate. The current base rate is 0.25%. The lender that provides a loan with a price nearest to this percentage is trustworthy for an affordable deal.
A mortgage is like a complete package deal, and it should have some other features to help you handle the significant obligation smoothly. Just like the lenders scrutinises every aspect in your finances and also as a whole, you too have the right to expect certain features in your property loan.
- Instant approval decision
- Borrower-friendly repayment policies
- Flexibility on LTV percentage
- Availability of funds for all types of properties such as - entirely constructed, under construction, freehold, leasehold etc.
- No prepayment penalty
- Mortgage payment protection insurance
How Much Deposit Do I Need For A Mortgage As the First Time Buyer?
If you want a mortgage for commercial property, you need to give a minimum deposit of 5%. However, the bigger deposit you keep, the more you can gain better interest rates. And, if you want to keep lower monthly repayments, then your mortgage will be cheaper. It means you should have an adequate deposit to submit before buying a mortgage. To clear the concept more, we are giving a reference table of Money Saving Expert:
How can a first-time buyer get a mortgage?
As a first time buyer, an applicant needs to go through certain stages and conditions to ensure the lender about a strong repayment capacity. Through attention and effort on some crucial factors, a first-time buyer can quickly get a mortgage.
- Deposit (as big as possible in size) –
Although the minimum deposit size is 5%, but a first-time buyer should try to try to arrange as big as possible for deposit. Qualifying for a higher percentage of the property value in a mortgage may face some financial constraints due to any possible reason. The down payment is significant, the loan amount need is smaller in size, and thus qualifying for it becomes smooth.
- Spotless payment record –
The buyer should keep the payment records spotless. It is more advisable for the bad credit score applicants who are more prone to rejections as compared to those with a good credit history and good income record. Recent financial behaviour comes in the immediate notice of the lender, and that should look polished and perfect.
- Debts should not dominate income –
60% income 40% debts is a delicate situation, similarly 70(income):30(debt) or 80(income):20(debt) ratio is even better but if debt percentage increases, rejection may happen. For example, 50 per cent earning and 50 debts or higher than 50% of debts is a complete threat. A first-time homebuyer should always be on the right side of the debt-to-income ratio.
- Stay in the current company for at least two years –
Employment stability is the strongest thing to stand strong on the eligibility criterion. As mortgage is a big amount loan, the lender always wants to see that the applicant is stable in the career. For that, it is essential to stay in the same job for at least two years before applying for the mortgage.
- Quit altogether from joint financial commitments if separated from a partner –
It is an essential point that many people do not understand. If a mortgage applicant is living separately after divorce, then it is necessary to quit from all the mutual financial responsibilities. It is vital because the finances of a person affect the finances and credit score of the partner-for example, joint bank account, store cards, a loan or any type of debt.
How You Will Make Monthly Mortgage Repayments
As per the trends of the UK marketplace, your monthly mortgage repayments are finalised based on what sort of mortgage you have availed. Here are kinds of mortgages that you can consider:
- Fixed-Rate Mortgages: It will confirm the monthly repayments for either three years or five years. Some lenders may extend the term to 10 years.
- Tracker Mortgages: It is based on the Bank of England’s actual rate. Here, the interest rates may go up and down depending upon the Bank’s standards. You need to be extremely sure about the repayments, and then you can apply it.
- Offset Mortgages: If you have savings account with your bank and take a mortgage also with that bank, you can offset your interest rates that you are going to pay on the mortgage.
Make the Ideal Use of Mortgage Calculator
If you are looking forward to getting the best mortgage deal, you must know:
- How much should you borrow?
- How much is it going to set you back?
You do not need to get into the hassle of contacting us because we have provided well-compiled first-time buyer mortgage calculator.
Our online calculator will help to analyse the precise mortgage deals from reliable lenders in the UK. The calculator is only for an illustrative purpose. It does not show a mortgage offer. To get the mortgage, you need to contact us as early as possible. Then, we will quickly access your application and forward it to our panel of lenders.
Can I get a 100% mortgage as a first-time buyer?
Technically the 100% mortgage is attainable in case you have a way to compensate the 5% amount of minimum deposit. Various terms and conditions apply in this concern, and you should know about that.
- Your guarantor pledges his/her saving account
If you want to avail funds 100% of property value, i.e. no deposit then your guarantor needs to guarantee a savings account with minimum deposit money. You need to convince your guarantor for that. Until the tenure gets over or the loan is fully paid off, the saved money remains in the authority of the lender.
- A family member gifts you the money
Another way is to submit the cash or gift to the lender that is received from your family member. It is a common culture in the UK. To financially help to children in future, family members like parents, grandparents gift a certain amount, and that is used in the compensation of deposit money to attain a 100% LTV.
MORTGAGE FOR FIRST TIME BUYERS FAQs
What is a first-time buyer mortgage?
This type of mortgage applies to those individuals who are applying for the home for the very first time. There are a few mortgage providers in the UK present exclusive benefits to them, but the overall mortgage is provided based on their income and spending.
What benefits do first time home buyers get?
Usually, there are not any significant benefits provided to the first-time buyers, but some lenders do offer an advantage of allowing borrowers to borrow up to 20% of the purchase price and that would be interest-free for the first five years of the mortgage.
Can I get a first time home buyer mortgage twice?
The question of getting first-time buyer mortgage demands consideration of the fact that if a person qualifies to be called a first-time buyer or not. Following conditions are applicable in this concern. Have a look–
You can be accepted as a first-time buyer if –
- If you own a commercial property but not residential property
- If the first time you applied through joint mortgage
- If you apply for a joint mortgage with your partner and no one of you, have any residential property
Can a first-time buyer rent the property?
A first-time buyer can rent the property, but this includes several but not stringent rules. For example -
- The first thing is you need to inform your lender that you want to rent out your home; otherwise, legal actions can be taken.
- Some lenders may ask you to stay in your current home for at least 6 months
- Different lenders have different policies on this matter. To get a better solution, ask your broker to get you the deal with your priorities.
If you want to buy the property for the rental purpose only then you need to get the buy-to-let mortgage because both types of mortgages (residential, buy-to-let) have different deposit size and interest rate.
How much money should I save before buying a house?
Well, to be precise and straightforward, you should try to save more than just the deposit money of a minimum 5% of property value. It is because the varied types of charges applicable change the final total cost of the mortgage or home buying. If possible, the idol is to save at least 8 to 10% of the property value. It shrinks the loan size, and you save a lot on the interest rates.