First Time Buyers

Buying your first property, and obtaining your first mortgage, can be daunting. After all, it is one of the most important financial decisions you will ever take.

As if that isn’t enough to cope with, there is also the current housing boom. Soaring prices have either put people off purchasing a property, or have encouraged them to take out mortgages which are simply not affordable.

So what should a first time buyer do? The best bet it to try to save as much of a deposit as possible. If you are not able to save any, then don’t worry as there are lenders who offer 100% loan to value mortgages. These are, however, generally quite expensive when compared to mortgages where a deposit is paid. Most lenders will require at least a 5% deposit.

You should also avoid the temptation of borrowing more than you can realistically afford. As property prices have rocketed, some lenders now allow you to borrow up to five times your salary. This is not recommended - by borrowing so much, you run the risk of financially over committing yourself and defaulting at some point in the future. Moreover, there is also the chance that you will find yourself with negative equity i.e. where the mortgage is actually greater than the value of your property.

Most lenders will allow you to borrow a more affordable amount. This is usually 3.25 x salary for a single person or 2.5 x joint salaries for couples.

And don’t forget the other costs you may incur. Your lender may require payment of a Mortgage Indemnity Guarantee, especially if you only have a small deposit. Then there are fees as well as the possibility of having to pay stamp duty.

For more information please click on the type of mortgage you are interested in:

• Repayment Mortgage - repay the whole loan amount back with interest
• Interest Only Mortgage - repay only the interest on a mortgage
• Endowment Mortgage - a combination of a loan and an investment
• ISA Mortgage - combines and loan and an investment with an ISA
• Pension Plan Mortgage - a tax efficient but non flexible option
• Buy To Let Mortgages - for second property rentals
• First Time Buyers - get on the property ladder
• Spanish Mortgage (for holiday home) - to buy your dream holiday house!

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