Are you a first time buyer looking to purchase your first home and take that all-important step onto the property ladder? Buying your first home is an exciting time, there’s nothing quite like having a deposit together and finding your dream home.
At The Levels Financial, we have helped 100s of first time buyers get approved for mortgages and complete on their houses, whether that be a flat, new build or country cottage.
However, when you’re going through the motions of buying your first home, there is a lot to think about, from answering questions such as: ‘Do I need to pay stamp duty’ to knowing ‘how to save for a mortgage in the cost of living crisis’.
This is why our helpful team of expert mortgage advisors have put together a helpful guide with everything you need to know about being a first time home buyer. Where we will be covering everything from what a mortgage is and the difference between a variable rate mortgage and a fixed rate mortgage and much more!
What You Need To Know About First Time Buyer Mortgages
When you enter into the world of house purchasing, sadly, it’s not all about booking house viewings and planning Pinterest boards of your new home. There is a lot of jargon and terminology you’ll need to become familiar with.
However, don’t fret, our team of expert local mortgage advisors are on hand to help provide you with the definitions for all you need to know:
What Is A First Time Buyer?
According to HMRC, to be classed as a first time home buyer, you “must not have previously purchased or acquired a property, land or dwelling with significant interest anywhere in the world, either by yourself or with others.”
In simple terms? A first time buyer is someone who has never purchased or owned a residential property before, in the UK or abroad.
What Is A Mortgage / First Time Buyer Mortgage?
A mortgage is a loan you get from a bank or a lender, with the sole purpose of purchasing a property or a piece of land. A mortgage is an agreement between you and your chosen lender, that you will repay the amount borrowed to your lender in agreed monthly instalments (plus interest). The agreement is that if you fail to make your monthly payments, your lender will have the right to take your property.
A first time buyer mortgage is a mortgage that is given to a first-time buyer and it may have specific benefits, depending on your lender.
What Is A Mortgage In Principle (MIP)?
A mortgage in principle (MIP), sometimes known as a decision in principle (DIP) or an agreement in principle (AIP) is a written statement from a lender agreeing that they will lend you a certain amount of money to purchase a property. (Find out more about MIPs in our blog post, ‘What is a mortgage in principle, how to get one and why you need it‘.
Some estate agents require a mortgage in principle before you can book viewings on homes.
How Much Deposit Do I Need To Save?
Before you start looking at properties, you will first need to save for a deposit. Generally, you will need to save at least 5% of the cost of the home you would like to purchase. For example, if you would like to purchase a house at £230,000 you would need a deposit of at least £11,500.
Generally, the bigger deposit you put down could make your monthly mortgage payments more manageable and could even open you up to more preferential rates. At The Levels Financial, we can help you plan your finances and work out the deposit needed for your future home.
Interest Rates & Different Mortgage Types
When purchasing your first home, you have to start navigating a world of interest rates, mortgage types, deposits and more. This is why at The Levels Financial, we will make sure to understand your lifestyle, financial commitments and property goals, to help you find the right mortgage for you.
While also taking into account the current financial climate, Bank of England base rate and more. The Bank of England base rate is continually being adjusted to fit with the current financial times. At The Levels Financial, we understand that it is in our clients best interest to find a dealt that is right for them.
Understanding The Different Types Of First Time Mortgages Available
When looking for and applying for mortgages, it’s important to understand the different mortgage types available to you and what it actually means to pay interest on your monthly mortgage repayments.
Knowing your monthly outgoings and what you can reasonably afford to pay monthly is a great place to start when looking for a mortgage type. At The Levels Financial, we can help you know and understand a wide range of mortgages (over 90 mortgage types from over 12000 lenders to be precise).
Because of the wide range of mortgages available in the UK, it is important to know all you need to know about track record mortgages, all you need to know about variable rate mortgages and the difference between fixed mortgages and discount variable mortgages. Knowing what different types of mortgages are available to you allows for more informed decisions.
Base Rates & Interest Rates
The Bank of England base rate can affect the rate of interest that lenders attach to their mortgage loans. Knowing and understanding the financial climate at the time you apply for your mortgage, will help you make an informed decision about what type of mortgage you wish you go for.
For more information about base rate and interest rates, see our blog posts:
- August 2023 interest base rate rising – how can this impact you?
- Base rate increase to 5% – what this means for you
- March’s base rate increase & what this means for you
- Looking ahead to mortgage rates in 2024
How To Apply For A Mortgage
Applying for a mortgage sounds like a scary and daunting process. However, with our expert team guiding you through the whole process, your mortgage application can be a breeze and just another step in the exciting adventure of buying your first home.
To apply for a mortgage, you will often need to provide your potential lender with various bits of information, covering proof of identity, proof of salary, financial history and more.
Income evidence:
- Last three months of payslips and proof of salary
Identity evidence:
- Passport
- Driving licence
- Proof of address (this can be in the form of a council tax bill or utility bill dated within the last three months)
- Six months’ worth of bank statements
- Proof of any savings
Lenders may also ask for:
- Credit card or store card repayments
- Loan repayments
- Car finance repayments
- Catalogue of credit accounts
How Our First Time Buyer Mortgage Advisors Can Help
If you’re looking to get on the property ladder for the first time, get in touch with our local and friendly mortgage advisors today. Our experience and knowledge can help you with finding the right mortgage for you and applying for it.
Make your house a home with The Levels Financial and call us on 01458 772040 or email us at admin@thelevelsfinancial.co.uk if you would like us to assist you with your first-time buyer mortgage questions.
For more information about first time home buying, see our range of blog posts here:
- First time buyer mortgages explained, step-by-step guide
- A guide – first time buyer mortgage advice
- What are the benefits of being a first time buyer
Please note:
- Your home may be repossessed if you do not keep up repayments on your mortgage.
- There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
- The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
