FIRST TIME BUYER MORTGAGE

 

Doing: Lender: Value/Price: Loan: Repayment Method: Term: Income Proof: Any First Time Buyer Purchase Remortgage All Residential Abbey Nationwide Alliance & Leicester First Active Royal Bank of Scotland Cheltenham & Gloucester Halifax Bank of Scotland Bank of Ireland Bristol & West BM Solutions Mortgage Express Standard Life Bank GMAC Mortgages UCB Home Loans Cheshire BS The Mortgage Works Woolwich Accord Mortgages West Bromwich Repayment Interest Only All Full Self Cert

Deal Type: Any Tracker Fixed Discount Any Deal Stepped For Term Max Arrange/Booking Fees: Tie-in Between: and months

There are a number of advantages and disadvantages of being a first time buyer. On the up side, many lenders have schemes specially aimed at the first time buyer market with special offers such as free valuation, legal fees paid or even cashbacks. But on the down side, since you have never had a mortgage before, it is more difficult for you to prove that you will be a 'good borrower'.

Lack of Credit History The main issue that lenders have to consider when deciding on lending to a first time buyer is that you have no track record of paying a mortgage. If the applicant already has a mortgage then the lender can look at the credit file or mortgage statement to see if they have managed to keep up their monthly payments (they take this as avidence of the likelyhood that future payments will be made on time). If you have never had a mortgage then they cannot do this and have to make more of a 'guess' at how you might perform. In this case, it is very important to have other lines of credit, such as credit cards or loans. The lender can then look at your payment history on these credit cards or loans as evidence that you will make your mortgage payments on time. If you do not have (and have not had over the last 12 months) any credit cards or loans then the maximum loan to value you are able to get is likely to be reduced. Low or No Deposit Often much of the deposit for a house purchase comes from the equity released from the sale of the current house. First time buyers can't usually do this and so the deposit has to be saved up (unless a relative can gift some money!). This can mean that there is little or no deposit. You can still get a mortgage with little or no deposit, with a High Loan to Value (LTV) mortgage but this does mean that the cost will be a bit higher. The important steps are: 100% LTV. A few lenders will lend 100% of the property value and interest rates and initial fees can be a little lower. 95% LTV. Most lenders will lend up to 95% of the property value but there will either be a higher lending charge or interest rates will be a little higher. 90% LTV. If you can get a 10% deposit then you should be able to access most of the lower cost mortgage deals any lender provides. This of course depends on there not being any other factors that may effect your eligibility for a mortgage. In the last month or so many lenders have changed their view on high loan to value loans. Many have withdrawn their 100% mortgages and the ones that are left are being more careful when they lend. High Income Multiple Many first time buyers find that they are stretching to the upper limits, the amount of money they need to borrow to buy the property they want.

Some lenders will lend up to a little over 5 times income even to first time buyers. but remember to be careful that you have considered what will happen if interest rates rise. Choices You Need to Make There are a number of things you can do to improve your chances of getting a mortgage, or to lower the cost of the mortgage during the early years or overall. Some of them include: Larger Deposit. If you have a larger deposit then the mortgage is likely to have lower costs. Also you will need to borrow less and so the income multiple will be lower. Get Credit Cards. You should try to have at least 2 lines of credit that have been running for close to 12 months. If you have more then it will help your credit score. But remember, you must make all the monthly payments on time. Also if you have an outstanding balance then it will reduce the amount you can borrow on your mortgage. If you don't have any credit then it will still be possible to get a mortgage but the number of lenders will be reduced and the loan to value may be lower. Stepped Rates. You can reduce your monthly cost in the early part of your mortgage by taking a stepped rate (you might do this if you expect your income to go up significantly). But this will mean that your payments will go up over time and the overall cost is usually higher. Buy Jointly. If you can't borrow enough on your own you might consider joining up with a relative or friend to buy together. This will mean that you can jointly borrow more but you should make sure that you have both understand what 'the deal' is and preferably have an agreement drawn up by a solicitor Guarantor. If you cannot get a high enough loan based on your income then some lenders have mortgages where your parents may be able to act as 'Guarantor' to your mortgage. Their income, after paying any mortgage they have on their own home, will need to be high enough cover the new mortgage on their own. Help & Information Our mortgage service is designed to put you in control of your mortgage by trying to make sure that you understand all the choices you need to make and then to provide solid administrative support to ensure things go through as smoothly as possible. If you have any questions about your situation or how we can help then please give us a call on 020 8746 3100 or make a no obligation online enquiry. Useful Tools: Maximum Loan Calculator Monthly Cost Calculator Affordable Loan Size You can also get up to an Extra £100 Cashback (or more) if we arrange your mortgage.

 

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