Moneytree Wealth Management
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First time buyers

Buying your first home is an exciting time, but before you can move into your dream place, you’ll need to borrow money to buy the property. This is done through a mortgage provider.

These mortgage providers must assess your affordability before they lend to you. They’ll ask for evidence of income and expenditure details and will conduct a credit search on anyone named on the mortgage application. They’ll use this to decide if they’ll lend to you, and how much if so. 

The interest rate you pay back on your mortgage is also influenced by these factors. Having a big deposit helps too – the bigger your deposit, the lower the interest rate you’ll be charged in the majority of cases. With most lenders, you’ll need to have at least 5% of the amount you want to borrow available as a deposit. 

Help to Buy ISAs and Lifetime ISAs (LISAs) are good ways to save for this as they’re tax free and the government will give your money an extra boost on top if what you’ve saved.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Equity Release will reduce the value of your estate and can affect your eligibility for means tested benefits.

Some of the first-time mortgage types available

Fixed rate mortgages

Your monthly mortgage payments stay the same for a pre-determined length of time. They’re ideal if you like knowing your repayments won’t shoot up if interest rates rise.

Tracker mortgages

The lender will set your mortgage at a rate above the Bank of England (BoE) base rate and your repayments move up or down accordingly. For example, if the BoE base rate is 0.5%, you might be charged 1.25% (0.75% above the base rate). These rates usually last for the lifetime of the mortgage.

Discount rate mortgages

These are mortgages with an introductory offer that lasts for a certain time-period. Once that time-period ends, you’ll be charged a higher rate.

Standard variable rate mortgages

This is usually the rate your mortgage reverts to after an introductory offer comes to an end. Rates vary by lender and will rise and fall as the BoE base rate does.

There are also a range of schemes available to help first time-buyers get on the housing ladder, including Help to Buy and shared ownership.

Things to consider

  • Your home may be repossessed if you don’t keep up with repayments on your mortgage.
  • You’ll need to budget for legal charges, as well as valuation and booking fees, on top of the amount borrowed.
  • Stamp duty might be payable too, depending on the value of the property you buy.

If you’d like to talk to us about a first-time mortgage, please use the pop-up form on the right-hand side of this page. Alternatively, you can give us a call on 01244 47010  or send us an email to: .

Tom Lenton

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