For first time buyers, mortgages can seem like a minefield. The options available for people looking to take their first step on the property ladder can be overwhelming. Not to mention the fact that a lot of the language being used can seem daunting and confusing.
While you could opt to get advice from your bank, using an experienced mortgage advisor could prove to be much more beneficial in both the short and long term. Unlike your bank, an independent mortgage broker can provide you with advice from an extensive range of lenders and products, some of which may not be available to you on the high street.
These are some of the things we can do to help you:
- Explain how to go about getting a mortgage and the house-buying process;
- Advise you about how much you can potentially borrow;
- Advise you of the level of monthly mortgage payments;
- Recommend the most suitable and competitive mortgage product;
- Arrange the mortgage application for you and help to administer the process between you and the lender up to completion;
- Advise you about mortgage valuations and surveys;
- Recommend a solicitor (if you want us to);
- Explain anything else you need to know about the house-buying process;
- Advise you about the various types of insurance which you may wish to consider in order to protect yourself and your mortgage;
- Provide you with constant reviews of your mortgage for as long as necessary and make sure you always keep your mortgage arrangements competitive and do the right thing.
Things you should know
How much can you borrow?
Before you begin looking for a house, the most important thing to do is to find out if you can get a mortgage and how much you can borrow. The maximum amount you can borrow varies from one lender to another and some lenders are more generous than others depending on your circumstances. All lenders have their own way of assessing affordability and when comparing the maximum amounts that the many banks and building societies will potentially lend you, the differences can be quite significant. Very few lenders use income multiples these days and most have systems which assess affordability based on your individual circumstances. This obviously takes into account your income but also includes your monthly outgoings and other aspects such as the mortgage term. Some lenders will disregard certain aspects of your monthly expenditure whereas other will include them. So, being aware of what the maximum amount you can borrow in the mortgage market can be a very important thing to know before you start weighing up the sort of price range you are going to look at when buying your new home.
Once you have found out what the maximum you can borrow is, it doesn’t necessarily mean you should go up to this level. It’s also important for you to know what the monthly payments will be if you were to borrow the maximum amount available. If it turns out that the payments are too high for your budget, we can advise you about what level of borrowing would be more in line with the maximum amount you would ideally like to pay each month.
To give you a rough idea of how much your mortgage repayments might cost, you can use our mortgage calculator, but it would always be best to discuss this with us as well to save any misunderstandings. Please be aware that interest-rate fluctuations can make a big impact on your repayments (unless you opt for a fixed-rate mortgage – see below). It’s probably wise to overestimate the interest rate to make sure that you can comfortably make your mortgage repayments each month.
In budgeting for your monthly payments, it is also worth bearing in mind that you may wish to take out protection for things like life insurance and critical illness, and there is also home insurance of course. We can also provide advice about all these types of thing and find you competitive quotes and arrange the cover.
Deposit
While it’s easy to say you should save as big a deposit as you can, in the real world we know that it’s easier said than done. As a general rule, the bigger the deposit the more mortgage options available. You will usually need a deposit of at least 5%, and this may be ideal for many first-time buyers and the perfect way to buy your fist home. But if you are in the fortunate position where you are able to put down 10% or more, this would enable you to get a more competitive mortgage product.
The source of the deposit is usually personal savings, but it can also include money from an inheritance or a gift from parents or other close family member. People can sometimes get a mortgage with no deposit where a close family member sells a property to another member of the family at below market value (known as a concessionary purchase). There are also one or two schemes available with lenders where parents can help out with the deposit without touching their savings, using equity in their own homes instead. And, of course, there is also the government help-to-buy scheme which offers help to people buying new-build properties.
As always, it is best to discuss this with us so that your options can be explained properly. Articles in the media or hearsay from family, friends or work colleagues can be very misleading, so it’s best to get the right advice by contacting us.
Variable vs fixed-rate mortgages
We mentioned fixed-rate mortgages above. What this means is that you will take out a mortgage which will have the interest rate, and therefore the repayments, fixed for a specific period of time (usually two, three or five years, although some lenders offer fixed rates for 10 years). These can really help you to create a budget and make sure the mortgage repayments are going to be affordable.
Variable-rate mortgages differ from fixed-rate in that the rate of interest can fluctuate based either on the lender’s discretion (to some extent) or the Bank of England’s base rate (often known as “tracker” mortgages). While they can be potentially cheaper than fixed-rate deals, they do come with the added risk that your repayments can go up.
The cost of your home
While first-time buyers in parts of Oldham and the surrounding areas benefit from the fact that house prices are a bit lower than certain other areas of the country, you should not underestimate the responsibility and commitments that come with buying your first home. Active Mortgage & Insurance Solutions can help to make buying your home easier and offer you the best impartial and professional advice from a very large range of lenders and mortgage products covering most of the mortgage market.
Call or contact us today to arrange a free consultation, and let’s see if we can help you take that first step towards the dream of owning your own home.
