What’s different about a first-time buyer mortgage?

28th March 2020

As a first-time buyer, provided you meet the strict lending and affordability criteria, there’s a great range of first-time buyer mortgages to suit your circumstances and your budget and to help you get on the first rung of the housing ladder.

As you’re new to the housing market, you may well be offered incentives or cashback schemes to encourage you to apply for a mortgage with them. The deposit you’ll need for a first-time buyer mortgage could be as low as 5% although, again, you’ll need to meet the relevant criteria to show you can afford your mortgage repayments.

You’ll also need to consider what type of first-time buyer mortgage will be right for you. There are several that you might be offered – your mortgage adviser will be able to talk you through the mortgage product that’s right for you, but here are the key features of each:

  • A fixed-rate mortgage is a sensible option for first-time buyers because you’ll pay the same monthly payment for as long as your fixed-rate period lasts. After that you can apply for a remortgage to secure another good deal. If you overpay or leave the deal early, you’re likely to pay a penalty, but the rates are usually lower than a variable rate deal.
  • Variable rate mortgage monthly repayments are linked to the bank base rate so, when rates are low, your repayments will be low too, but you’ll pay the price should rates rise. Tracker mortgages and discounted rates are also guided by the bank base rate.
  • Offset mortgages offset the interest on your savings against your mortgage – talk to your mortgage adviser to check if this is the best use of your savings.
  • A repayment mortgage means that every monthly payment you make will go towards paying the capital sum you’ve borrowed until you own your home outright.
  • Help to Buy loans are designed to make it more affordable for people to get onto and move up the housing ladder. You’ll need to save a deposit of at least 5% to qualify for the government’s Help to Buy equity scheme, which will give you an interest-free loan of up to 20% (40% in London) to put towards a new-build home valued up to £600,000. You’ll pay interest from Year 6. You can find out more about Help to Buy mortgages

There’s lots to think about when it comes to buying your first home, but we’re here to help you through the process. Talk to our team of expert mortgage advisers about your options and we’ll help take the stress out of your move. Call us on 08454 500200 or click here to make an enquiry.

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Absolutely fantastic service from Stephanie very knowledgeable and explained everything superbly, and made me feel very comfortable and confident in the whole process or organising my remortgage. Would highly recommend Charters Financial Services.

Mark S

March 2020

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