Getting your first mortgage isn’t easy, but it is not impossible. You just need to take some steps and accept professional help where it is prospective. But first, what is a mortgage?
Well, as a home buyer it is unlikely that you will be able to afford to pay the entire cost of the house when you first buy it. So to make up the difference between the money you can put towards the house and its actual cost, you borrow a huge sum of cash from a suitable bank.
In return, you agree that you will pay back that cash, plus interest, in excess of a fixed term. Let's say, 25 years. But, it is this interest that causes the confusion as it might be charged at different quantities, depending on masses of factors.
Such as, you might decide that you want a fixed rate mortgage. With this, for a certain amount of time the interest charges are fixed and no matter what happens to base rates, your repayments stay exactly the same. This is wonderful when interest rates go up, but not so tremendous when they drop. And even if they stay the same this is not always good news as quite often the fixed rate is what you may get as a variable rate.
The variable rate is the basic rate that the lender will charge its customers. There are no frills on this one, it only moves up and down with base rate changes and the general mood of the building society. Typically, it is merely used by customers who have completed their special offer period and might’t, for whatever reason, move to a better deal. But with low base rates it might be a good deal.
Then there are a whole variety of other incentives for the customer to take up an offer from a particular bank. As for instance, cashback offers and other draws. The problem is that the cost of all of these does ultimately come out of your total repayments, so whilst a cashback incentive might seem good now, you might be paying more in the long run.
Lastly, for now, is the question as to which of the bank’s offers are open to you. As a first time buyer there might be more options to try to tempt you in. But loads of of the mortgages on the market might be ruled out for a whole variety of reasons.
Such as, how much deposit are you able to put down? Traditionally it is the first time buyer that cannot afford as big a deposit as the mover and remortgage customer. But some of the best interest rates are merely available to customers placing at least a 25% deposit. Other mortgage offers may not be available to you if your credit rating is not high enough and a whole host of other factors.
So, which mortgages are best for you? The best thing to do at this point is to ask for help from a completely independent mortgage advisor. Pick one who might search the entire market and talks to you around your circumstances and priorities.
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