If you are thinking of buying your first home, apart from looking to see what’s on the market to whet your appetite, you will need to know a little about first time buyer mortgages. I say a little because there are plenty of first-time buyer mortgage specialists around who can help you. In the UK, advice about first time buyer mortgages from professional mortgage advisors is closely governed by the financial services authority. They make sure that anyone offering advice on first-time mortgages is an expert in that field and also makes the sale – if the consultation leads to a sale – completely transparent. The mortgage advisor is obliged to ask your permission to give you advice, also to declare how he is remunerated to ensure that he does not steer you towards a particular first-time buyer mortgage except the right one for you.
There are many ways you can find mortgage advisors or mortgage brokers willing to offer advice on first time buyer mortgages. Typically you might have someone recommended to you, or you might search in the internet or in your local telephone directory. These days, you can pretty much choose whether you communicate on-line, by phone, in writing or in person.
There may be at least two consultations before the mortgage advisor is in a position to advise you on what your options are or what he thinks is the best first time buyer mortgage for you. He will need a great deal of information about your financial circumstances – your earnings, outgoings – and in particular any outstanding loans or credit card bills. These needn’t necessarily mean it will be hard to secure a mortgage but it will all be considered when deciding what monthly mortgage payments you would be able to make – also taking into account any possible increase in interest rates which would push up the monthly payments.
As the UK first time buyer mortgage market has become tougher, many of the lenders have been quite innovative with their mortgages. A number of first time buyer mortgages have been launched specifically with first time buyers in mind. In addition, standard terms have now been changed. In times gone by, generally speaking you could multiply your annual salary by two and a half to see how much you could borrow. Typically, the most you would ever be lent might be 100% of the value of the property and you would normally pay it back in 25 years – or at least set out to do that at the outset.
Today, we see extremes of lending up to six times an annual salary, lending of up to 130% of the property value and 40 year terms – even ‘lifetime’ mortgages. We also see lenders willing to lend in various other ways. For example, the joint mortgage for friends buying together is growing in popularity – it’s not without it’s risks so we recommend you buy on equal terms and have an agreement drawn up but it can make the difference between being on the property ladder – or not. With the Government’s shared ownership scheme, shared ownership mortgages are now also in demand, but probably one of today’s most popular first time buyer mortgages is one where parents act as guarantors. With property prices having risen so much, many parents are now ‘flush’ with equity enabling them to help with mortgages or deposits in a number of ways. Also there are graduate mortgages, offset mortgages – if any member of your family has savings, rent to buy mortgages, lodger-revenue first time buyer mortgages and many more. One of the greatest innovations – though not without its price is the shared equity mortgage.
As new first time buyer mortgages are being launched and upgraded every week, it is always best to speak to a mortgage advisor about first time buyer mortgages. They will know which is the latest innovation, which are the best lenders, what deals are around at that time and most importantly which first time buyer mortgage will be best for you.