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Your Guide to Getting Your First Mortgage

There is plenty of excitement in buying your first home, but there is also plenty of anxiety and overwhelm. The application for the mortgage is the thing most first-time buyers will worry or panic about.

There are just so many mortgage products and types available, so how do you know the best one for you?

You may be surprised to hear that picking your mortgage is really simple. We’ll go through all your options here to help you get the best for your first home.

The Deals for the First-Time Homeowners

All mortgages are technically available for first-time buyers, but there are usually specific packages created by banks or building societies. These package deals can include low fees, legal fee contribution, and even cash-back offers.

The Amount Available to Borrow

You’ll need to work out just how much you can afford to borrow before searching for the perfect home. What’s the point in finding your dream home that is tens of thousands over your financial means?

Lenders usually consider your salary to work out the amount you can borrow. In many cases, your mortgage will be three times the annual mortgage. However, some building societies and banks have started to consider budgets and want to know outgoings to determine your real affordability.

Future potential interest rate rises are also considered, as they could have a detrimental impact on your finances.

That doesn’t mean you’re guaranteed a mortgage. Your credit score will also be considered. Those who have made poor financial decisions or struggled with debt in the past may find that they are turned down for mortgages or offered a much lower rate (or higher interest rate).

Get Saving for the Deposit

Gone are the days where you can get 100% mortgages. You will need to have some sort of deposit, with lenders now looking for at least 5% deposits before they approve mortgages. This means they approve 95% of a property value, which is then called the loan-to-value (LTV). Those who have a 10% deposit will find they improve their chances of being approved.

People with 40% deposits will get a much better rate with their mortgage, since they don’t need to borrow as much.

It really is worth saving as much as you possibly can, so you can open all the mortgage products available from a bank or building society. You’ll also get the most competitive interest rates for your loan.

Get a Fixed Mortgage Rate

While there may be plenty of products, they will fall into two distinct categories for mortgages: fixed rate and variable rate mortgages.

First-time buyers tend to want the fixed-rate mortgage, since they have more control over their budget. Your monthly payments are set every month, since there’s no need to deal with the fluctuating rates of interest.

Fixed rate mortgages are available for two to five years in the majority of cases. There are some available for 10 years and more, but these types will depend on your credit score, current situation, and deposit.

Make a decision over how long you want to be locked into a particular rate. There tend to be early repayment charges linked to fixed rate mortgages if you want to end the deal earlier than you originally wanted. This is why most buyers won’t want to take a fixed rate for more than 10 years.

It is also worth noting that most of the fixed rates will be set higher than the variable rate interest rates. You’re paying the extra for the peace of mind and ability to budget, while the lender is protecting itself from losing out on money if the interest rates rise significantly.

The benefit for you is that when the Bank of England increases the interest rate, your mortgage payments will stay the same since your interest rate has been fixed.

If you want to find out how much your mortgage repayments can be affected by interest rate fluctuations, you can use our base rate calculator for free.

Get a Variable Rate Mortgage

So, what’s the big deal about a variable rate mortgage?

This type tracks the Bank of England base rate, so it can fluctuate in line with that. If the Bank of England base rate goes up by 0.25%, your mortgage rate will increase in the same fashion.

But you can always get a discount mortgage. This will usually be linked to a standard variable rate (SVR) set by the lender and not the Bank of England. The lender is allowed to change the rate whenever it wants—or not change the rate even if the Bank of England does.

There is the risk of seeing fluctuations when you weren’t expecting them with this type of mortgage, which is why trackers are extremely popular.

There is the opportunity to combine a couple of mortgages together, such as tracker and fixed rates. You can also get a guarantee on variable loans, so the rates don’t increase above a certain point. It’s worth playing around with the types available and make sure you understand all about mortgages before you sign yourself into a contract.

First-Time Mortgage Fees

Many first-time buyers forget about the fees for their mortgages. These fees can be as much as £1,000 or more just to set up the mortgages, and there is usually a non-refundable book fee of a few hundred pounds to swallow.

Then you have the costs of buying your first home, such as conveyancing and surveying fees. The costs will quickly add up if you need to furnish that first home, too.

Make Sure You Get the Right Mortgage

You can keep the complexity to a minimum with the help of for your first-time mortgage needs. It doesn’t matter what size of deposit you have or the type of mortgage you would prefer, we will compare everything to find you the best deal and best bang for your buck.

Our comparison is completely free and independent. Do it online any time of the day.


All information and figures have been used only for illustration purposes.