UK First Time Buyer Mortgage

For first time buyers the mortgage market is a maze it can be confusing and full of terms that are hard to understand, but you should not be put off buying a property. Consider that the rent that you pay is really not benefiting you at all, apart from putting a roof over your head you may as well flush it down the loo. Having a property of your own can be a long term investment, one that will increase in value, one that can be passed on to your family, making their lives easier.

First time buyers have many different mortgage options open to them: fixed rate, a capped rate, a discount or a tracker mortgage, even a 100% mortgage.

The Amount available to borrow
The amount of money you can borrow on a mortgage will depend on your income. Lenders use different combinations to work out how much you can borrow, it varies, some use an equal percentage of both you and your partner’s wage. Some will calculate it using a larger percentage of the highest income, and a lower percentage of lowest income. Single applicants can usually borrow around 3.25 times their income. As you have probably noticed house prices can rise quickly, getting your foot on the first rung of the ladder could be a wise move.

First-time buyers who only have a low deposit should watch out for mortgage indemnity guarantees (Migs). Many lenders force borrowers to buy these as a condition of the mortgage. MIG - Mortgage Idemnity Guarantee is designed to protect the lender if the borrower defaults. It has no benefits for the borrower and can cost them thousands. Lenders may suggest you spread out the mig over the period of the mortgage, but it simply adds onto your outgoings.

A larger deposit may mean you avoid having to pay a mig.

It is always beneficial to have the largest down payment you can manage to save toward the properties value as a down payment does not cost you interest. Most lenders prefer to lend you a percentage of the value of a property rather than 100%, because should you not keep up repayments they then have security, they could take procession of the property and sell it for a profit. A lender is legally within their rights to repossess your home if you continuously fail to make monthly payments. When you take out a mortgage you will be asked to sign an agreement allowing the lender to take this action should there come a time they need to.

Full range of UK Mortgages: