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Four mortgage considerations for first-time buyers

Making a home purchase for the first time is an exciting but daunting process. The important elements involved in obtaining a mortgage include how to choose the best mortgage, the deposit, how much you can borrow, and whether you need a guarantor. Let’s look at these in more details.

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Is a fixed or variable mortgage best?

The first step on your journey is understanding the difference between a fixed and a variable product. The interest rate on a fixed-rate mortgage stays the same for a certain period and the payments remains the same for the term. A variable mortgage means that the interest rate can fluctuate, which means your payments could go up or down. The advantage is the prospect of a low monthly repayment; however, if you are nervous about market movement, your best bet is a fixed-rate mortgage.

How much deposit do you need to buy a house?

The minimum deposit you can put forward is five per cent of the property value; however, the more you can put down, the better your deal will be. Lenders prefer a more sizeable deposit and you will be able to enjoy a lower interest rate if you can spare more.

A range of professionals can assist you in the home buying process by providing helpful information about mortgages.

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How much can you borrow?

Lenders need to satisfy themselves that you will not fall behind on your repayments. The amount that the lender is willing to lend will depend on your financial situation. For single people, the lender will usually grant you four times your annual salary; for joint applicants, it is three times the salary of the two applicants combined or four times the higher earner plus the second salary.

Mortgage lenders may also factor in your essential outgoings, such as utility bills, any credit card debts and loans, and childcare fees. If you are new to the buying process, there is plenty of helpful information about mortgages available.

Can a guarantor mortgage help me to get on the property ladder?

Guarantor mortgages enable parents to assist their children with a home purchase by using their savings. The parents will deposit a percentage of the home’s value into a savings account with their offspring’s mortgage lender, which will be withdrawn if the child defaults on the mortgage.