Types of mortgages
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Most first time buyer mortgages are either fixed rate or variable rate mortgages. Fixed rates usually last between 2-5 years (but sometimes as high as 10 years) and with these you have the certainty of knowing how much you will pay each month.
Variable mortgages follow either the Bank of England’s base rate or, with discount mortgages, the bank’s own SVR (standard variable rate) and monthly costs may go up or down depending on those.
You’ll probably need a minimum deposit of 5% of the property’s value, but the best rates will usually go to those borrowers who can provide a bigger deposit, often of up to 40% of the property’s value. So saving as large a deposit as possible can give you a wide range of options with more competitive interest rates.
Some first time buyer mortgages involve buying a percentage of the property’s value and renting the rest from a housing association, this is known as Shared Ownership.
Know what you can afford
Since tougher mortgage affordability rules were introduced in April 2014, lenders take into account not only how much you are earning, but how much you’re spending, and whether you have the money to make your monthly mortgage repayment.
A thorough review of your monthly fixed outgoings could help you present a better picture of your finances to prospective lenders.
Your lender will usually want to check your credit report, so reviewing this and making sure it’s up to date, and that the information on it is accurate may help you save the time of later corrections.
Some simple, well-managed forms of credit, like a mobile phone account or opening a bank account, could show lenders that you can pay bills responsibly and on time and can help build up your credit score ahead of a first time buyer mortgage application.
Researching your options
If you compare first time buyer mortgages before you apply, it will leave a soft search on your credit report that won’t leave a footprint visible to lenders, so it won’t affect your credit score.
Using a comparison site can help you find out which first time buyer mortgage deals you’re more likely to be accepted for.
Getting your first home is often an exciting life step. For the initial purchase, you’ll need to factor in stamp duty, solicitors fees and valuation fees. On top of that, you’ll need to keep on top of the on-going costs once you own the properly such as mortgage repayments, insurance, maintenance and other day-to-day costs.
It’s important to keep up with mortgage repayments as your home may be repossessed if you do not keep up repayments on your mortgage. For this reason it’s important to factor in how much your interest payments could fluctuate based on the markets and decide whether or not you should consider a fixed term mortgage.
Some first time buyer mortgages allow for you to make overpayments, which can help to reduce the overall debt and subsequently the interest paid.
Experian CreditMatcher uses your credit information - as well as information you provide about your requirements and financial circumstances - to show you products that are matched to you.
This means you can see a list of credit products that you are more likely to be accepted for, and as it is a ‘soft search’ only you can see it on your credit report. For a credit product search that matches your credit information just visit Experian CreditMatcher.
Experian CreditMatcher does not give advice on the suitability of products to customer’s needs. If you would like to get help on which products suit your needs, it is best to seek help from a financial adviser.