First Time Buyer Mortgage

The biggest financial commitment most people undertake is the purchase of their home. Yet most people jump into getting a first time buyer mortgage without looking at all their options. Home loans are a highly competitive product with so many different products available to choose from.

When it comes to home loans there are allot of confusing words, terms and jargon thrown around. There are capped rates, stepped discounts, Australian, offset and a long list of deals available to choose from. Many people choose to speak to an independent advisor to guide them through the market to make sure they get the right deal for their personal circumstances.

But it is well worth the effort looking for the right idea. After all rental payments can be seen as money down the drain and a carefully chosen property in the right area can be one of the shrewdest investments You can make. Many people believe getting you foot on the property ladder is important as over many years it has been proven that prices can only really increase if you take a long term view.

The amount of mortgage you can get depends on your income. Usual multiples are 3.25 times the gross salary of single borrowers. A couple can get 3.25 times the first income plus one times the second income. However, you could get 2.5 times the combined income of both of you. Add onto this the amount that you can afford to pay as a deposit and you have the amount you can pay for your first property.

Some lenders will only lend you a certain percentage of your property. This is lessen the chances for them of the property being worth less than what they owe should you default on your payments. The amount of the mortgage expressed as a percentage of the of lender's valuation of the home is the loan to value (LTV). So, if you have no deposit at all, you will need a loan to value of 100%.

Remember, buying the house is only a small part of the costs you are liable for. You have to pay stamp duty, which is 1% of the purchase price for properties between £60,000 and £250,000, then 3% up to £500,000 and 4% over that amount. Plus you have to pay for the survey, the valuation, and the solicitors fees. You may also have to pay an arrangement fee for the mortgage and a Mortgage indemnity Guarantee - which is insurance for the lender for you defaulting on your payments when your property is worth less than the loan. Add all these costs to the cost of your property and you may need a mortgage of 105% or more, which is still possible.

First Time Buyer Mortgages :