Important information for first-time buyers 

Friday 25 November, 2022

With inflation rising and the cost-of-living crisis affecting everyone, forecasters are predicting a recession. Rising mortgage interest rates are at an all-time high since the 1980’s. What do first-time buyers need to do to secure a mortgage?

Mortgage costs for first-time buyers rise

Now mortgages for first time buyers are now even more expensive and lenders are asking for bigger deposits, or a 10% minimum deposit. This can make it difficult to secure a mortgage. 

Call our Lonsdale Mortgages broking team for mortgage advice

Our qualified Lonsdale mortgage brokers in St Albans, Chippenham and Lichfield assist first time buyers secure a mortgage, saving you time and money. Lonsdale mortgage brokers will assist you with the whole mortgage process, so you complete it as quickly as possible. You can call our mortgage brokers on 01727 845500 or alternatively, complete our booking consultation and one of our mortgage advisors will call you back. 

How much deposit do I need to buy my first home? 

Before looking at properties, it is important to save for a deposit. Recently lenders have been asking for a 10% deposit. Saving 10% will give you access to a greater variety of cheaper mortgages available on the market. The bigger the deposit, the smaller your mortgage will be. 

Oliver, a Lonsdale mortgage broker in St Albans, Hertfordshire said: 

‘‘Organising a mortgage is normally complicated, but currently first-time buyers are finding it harder than ever to get a mortgage agreed as lenders ask for higher deposits. Our mortgage advisors will work with you, and we regularly review the mortgage market, so we know what products and rates are available to you. We can assess your financial circumstances and review your income and expenditure so you know how much you can borrow; we can also offer advice on what lenders require. We recommend that you call us before you start house hunting, so you don’t waste time looking at properties that are unsuitable.

Other costs you need to pay for when you purchase your first home

These can include: 

• -  Solicitor fees. 
• -  Buildings insurance. 
• -  Survey costs. 
• -  Stamp Duty. 
• -  Furnishing and decorating costs.
• -  Removal and moving in costs. 
• -  Mortgage arrangement and valuation fees. 

Will I be accepted as a first-time buyer? 

If you have saved at least a 10% deposit and aim to borrow no more than 4.5 times your income, you are likely to be accepted as a first-time buyer. However, there are other thing first-time buyers need to consider.

Credit Checks

First time buyers will need a credit check, this means you will need a good track record of borrowing and repaying money on time to be considered for a mortgage. 

Affordability test

Your lender also needs to check if you can afford to pay your mortgage. They will look at what you spend each month, how much you earn and consider any outstanding loans you have.  It is important to check your spending patterns before you apply for a mortgage.   

Understanding the different mortgage deals, terms, and fees available? 

Mortgage term: 

The mortgage term considers how long you will have the loan. Most mortgage terms will be 20 to 25 years, but they can be up to 40 years. Your loan must be repaid in full by the end of the term. If you cannot keep up with your repayments, the lender can repossess your home and sell it, so they get their money back. This means your house could be repossessed. It is important, therefore, to ensure you pick the best and most affordable mortgage deal for your circumstances. 

What type of mortgage do you require?

This is an important consideration when you get a mortgage, as it will affect the interest rate you will pay on the loan. Two popular mortgage products are tracker mortgages or fixed rate mortgages. You could consider a tracker mortgage (where the rate changes in line with the Bank of England base rate). If you take a fixed rate mortgage your monthly payment stays the same throughout the mortgage term.  These products are available for usually two, three or five years before you need to remortgage. Otherwise, your mortgage will revert to the lender’s Standard Variable Rate (SVR) of interest, which can change without warning. 

Mortgage fees: 

When setting up a mortgage, remember you will have other fees. These can include stamp duty, solicitor fees, product fees.  There may also be a fee for leaving your mortgage, by remortgaging or paying it off. Most deals tie you into a certain timeframe, which could be longer than the deal period, so you might have to spend time on the lender’s standard variable rate (SVR) unless you are willing to pay a charge. 

In summary: 

Finding the right mortgage can be complex and difficult, but our Lonsdale mortgage brokers have the expertise to help find you the best mortgage deal. Our mortgage brokers in St Albans, Chippenham and Lichfield can review your mortgage needs and offer appropriate mortgage and protection advice for first time buyers. Call us now on 01727 845500 for an initial mortgage advice consultation. 

As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The information contained within this article is for guidance only and does not constitute advice which should be sought before taking any action or inaction.

Latest News Next Article Previous Article