What to look out for as a first-time buyer
Buying your first home can be an exciting time but also a daunting one as well. One of the first concerns is the mortgage and wondering which one is best to go for. You also need to be sure how much you can afford. You also need to deal with the application process.
Yet, first-time buyers are often in a better position than other borrowers. Banks as well as other financial lenders have a number of products specifically designed for first-time home buyers. This can mean lower fees, cashback or payments to offset legal costs.
The first thing to decide as a first-time buyer is how much you can afford to borrow. Be as realistic as you can about this before visiting the estate agents. The traditional notion of “three times your salary” may no longer be relevant nowadays. Lenders tend to concentrate more on affordability and, as such, will typically ask you to give full details of your income and expenses for each month. Your credit score is also taken into account, so the worse your credit rating is, the less favourable the mortgage is you'll be offered, if at all.
You also need to decide whether you want a fixed-rate or variable-rate mortgage. The benefit of a fixed rate is you know how much you have to pay each month though it may also tie you in to a longer time period than you're comfortable with. On the other hand, a variable-rate mortgage will be linked to the Bank of England's base rate which can go up as well as down.
There are also lenders who mix and match the two types of mortgage to create their own product. No matter what you choose, make sure you know what you are signing up for, how the mortgage is structured and, generally, what you'll be expected to pay each month. For such a financial commitment, it can be worth hiring a mortgage broker or seeking the advice of an independent financial advisor.
Some lenders mix and match the two types of mortgage to create their own product. Make sure you understand completely how your mortgage is structured, and how much you will be expected to pay each month. Don’t be afraid to seek advice from a mortgage broker or independent financial adviser if you are struggling – remember this is the biggest financial commitment you’ll probably ever make.