Mortgages A Guide For First Time Buyers

Mortgages A Guide For First Time Buyers

Mortgages - a​ Guide For First Time Buyers
The prospect of​ buying a​ home for the​ first time can be a​ very exciting experience,​ however for many it​ can also be a​ very daunting one too .​
Being able to​ put down a​ deposit significant enough to​ secure a​ mortgage remains the​ biggest up hill struggle for most first time buyers .​
The fact is​ that the​ bigger your available deposit,​ the​ wider your selection of​ mortgage products will be.
Traditionally the​ average first time buyer would have had to​ be able to​ put down a​ 10% deposit - in​ some areas of​ the​ country,​ this could mean well over £10,​000 for an​ average house price!
Understandably,​ finding that sort of​ money is​ going to​ be tough for most would be borrowers and in​ recent times lenders have recognised this problem and have sought to​ look for alternative measures - it​ is​ now possible,​ depending on​ your credit record,​ to​ secure a​ 100 percent loan to​ the​ value of​ the​ property.
It is​ advisable in​ most cases however to​ provide some form of​ deposit as​ there is​ a​ danger of​ being in​ negative equity should prices fall sharply .​
Without a​ deposit,​ the​ lender will also view you​ as​ a​ higher lending risk which could result in​ your mortgage interest rate being less competitive .​
As tempting as​ it​ may be,​ taking out a​ loan elsewhere to​ pay for a​ deposit should be avoided .​
When making your mortgage application you​ will be obliged to​ declare all other outgoings and monthly expenditure - this may reduce the​ amount of​ borrowing you​ are eligible for .​

Mortgage Affordability
Banks and building societies have traditionally used income multiples as​ a​ way of​ assessing how much an​ individual is​ eligible to​ borrow .​
Unfortunately,​ the​ force of​ the​ housing market can often leave such calculations looking extremely outdated - since the​ recent housing boom,​ this calculation can produce an​ affordability gap as​ house prices have risen far beyond the​ traditional calculations.
Banks and building societies have had to​ move with the​ times,​ although some might say slowly at​ times - many will now let you​ borrow on​ your ability to​ pay which can sometimes allow applicants to​ borrow a​ little more .​
The type of​ mortgage product you​ select can also have a​ bearing on​ the​ level of​ borrowing you​ may take out; for example,​ if​ you​ chose a​ five or​ ten year fixed rate mortgage,​ the​ lender may be prepared to​ lend you​ a​ little more because the​ monthly repayments stay the​ same for a​ long time,​ which on​ the​ whole is​ easier for a​ borrower to​ budget their outgoings .​
Mortgage Fees
There are many different fees to​ account for when buying a​ property,​ whether you​ are a​ first time buyer or​ second time buyer .​
Stamp duty is​ a​ government tax which is​ calculated as​ a​ percentage depending on​ the​ purchase price of​ your property .​
Other fees may include; mortgage valuation and building survey costs,​ solicitor fees,​ lender arrangement fees and estate agent fees .​
It is​ very common to​ overlook these costs when scraping around for a​ deposit to​ put down .​
Some lenders will even charge you​ a​ fee known as​ a​ higher lending charge - this charge is​ usually applied where a​ borrower is​ looking to​ borrow over 75% loan to​ value .​
The higher lending charge is​ applied to​ protect the​ lender in​ the​ event of​ mortgage shortfall however,​ the​ cost is​ covered by the​ borrower.

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