Mortgage Advice for First Time Buyers

Becoming a homeowner gives you security and stability, as well as getting you away from the world of renting where your monthly payments do little more than line your landlord’s pockets.

Unfortunately, there are all sorts of obstacles and intimidating aspects of securing a mortgage which can create concern among first-time buyers.

To put you in the best possible position, here are some useful pieces of advice that should solve a few of the major mortgage conundrums.

Don’t overlook mortgage rates

Mortgage rates are incredibly important and will determine the affordability of deals more than almost any other aspect, yet they can seem complex if you have never encountered them before.

In short, mortgage rates set out the amount of interest you will pay on your home loan. The higher the rate, the more your monthly repayments will be, and the greater the total amount you will pay back to your lender in the long term.

Looking for lower rates on sites like Moneywise is therefore sensible, since it will let you get the best possible package.

You also need to factor in whether the rate is fixed or variable. Fixed-rate deals tie you into the same level of interest over a set period, regardless of market fluctuations, while variable rate deals will potentially save you money if rates fall, but could cost you more if they rise.

A fixed-rate mortgage is often best for first-time buyers since it lets you plot out exactly how much your repayments will cost and plan your finances accordingly.

Build up a good deposit

While some lenders will offer you mortgages in exchange for a minimal deposit, it makes sense to save as much as possible and provide a large deposit to go along with your application.

A bigger deposit will not only mean that your monthly repayments will be smaller since the total loan amount will be lower, but should also prove to prospective lenders that you are responsible enough to save sensibly, and in turn will make a good candidate for the mortgage in the first place.

Remember the additional expenses involved

When buying a home, the cost of the property itself is just the first expense that you will need to factor into your calculations.

Other costs to consider include the legal fees and agent fees which may be necessary to complete the sale, the home insurance you will likely be required to secure by your lender to get the mortgage, the costs associated with moving and storing your belongings, as well as any repairs, maintenance and home improvement works you want or need to complete once you are moved in. There will also be taxes to pay, and other fees depending on your circumstances and the location of your new home.

In short, be prepared to do some careful summing up of the expenses you will face before you even start house hunting, so that you can be sure that you have set a realistic budget for your first home.

Pay down any other debts

Lastly, if you want to be in with the best chance of getting a mortgage application approved, and also gain access to the most affordable deals, it is best to pay off any existing debts you have, such as credit cards and auto loans.

Having a squeaky clean credit score is also immensely helpful, so keeping up with repayments on your financial obligations, even if you do not pay them off completely before applying for a mortgage, should be a priority for first-time buyers.