If you’re a first time buyer, you may be feeling a little overwhelmed by the sheer volume of decisions required to take the first step onto the property ladder. One of the first choices you’ll undoubtedly need to make is about finance. But which mortgage should you choose?
As a first-time buyer, it is unlikely that you’re a cash buyer and so you will need to arrange finance to make your purchase.
There are hundreds of different mortgage products to choose from, depending on factors such as the size of your deposit and how much you can afford to pay out each month on your mortgage repayments.
It is not just a question of choosing the cheapest rate (although this is a big factor), which is why it is worth speaking to a mortgage broker.
Jonathan Harris, director of mortgage broker Anderson Harris, says: “There is more choice of mortgages at higher loan-to-values for first-time buyers than at any time in the past several years, but the new mortgage market rules have added a level of difficulty.
“Lending criteria are stricter with lenders checking you can afford your mortgage both now, and when interest rates rise. To make matters more confusing, lenders have interpreted the new guidelines in different ways so using an independent mortgage broker will help you navigate this minefield.”
Here are a few suggestions of mortgages for first time buyers from mortgage brokers Anderson Harris:
- Mortgage deal for a first-time buyer couple with a 25 per cent deposit and earning a joint salary of around £90,000. For a property with a purchase price of £360,000 and a loan of £270,000, we would recommend a two-year fix with Chelsea Building Society at 2.69 per cent with a fee of £345.
- Mortgage deal suggestion for a first time buyer looking to use Help to Buy as they only have a 5 per cent deposit and a single salary of £35,000. For a purchase price of £140,000 and a loan of £133,000, a two-year fix with Lloyds Bank at 3.98 per cent and no arrangement fee.
- Mortgage deal suggestion for a first time buyer looking to buy with the help of the Bank of Mum and Dad as guarantors. Most lenders will shy away from guarantors, with only a very small handful of small building societies now providing them. Halifax has the cheapest HTB 95 per cent deals on the market and is flexible with applicants who have just started in a new job, perfect for the recent graduate moving to new city for a job and getting a deposit from Mum and Dad. Its two year fixed rate has a rate of 5.19 per cent.
