First Time Buyers
1. Learn the lingo.
The Rate: This is the interest you are charged, and it dictates the amount you repay each month. The Type: Fixes are where the rate is locked in. Trackers are where it can only move in relation to UK base rate moves. And variable rate, where they tend to move with UK base rates, but can also move at the lenders whim.
To help with this I’ve a totally free 60 page First-Time Buyers mortgage booklet you can download from www.mse.me/FTB which takes you through everything in more detail.
2. Deposit, deposit, deposit
Every 5% bigger deposit up to 40% cuts the rate - so a little more can have a big impact. Of course saving for a deposit is often a struggle. From autumn you’ll also be given the chance of a cash boost towards buying your first home if you save into a new type of Help to Buy ISA. For full information see www.mse.me/helptobuyisa.
3. Speedily compare to benchmark your cheapest
It’s important to start to work out the exact cost you’re likely to pay as soon as possible. Mortgage rates are currently the lowest they have ever been, with even 5 year fixes below 2%.
4. Two things that can kibosh your application.
The credit check. It’s crucial to manage your credit score, eg, never make late payments, minimise other applications and put a landline not a mobile on applications. Affordability checks. Lenders must stress-test if your mortgage is affordable, even if rates were 6-7%. They’ll want evidence of income, big bills, expenses, even eating out. So being frugal in advance helps.
5. Don’t fall for ‘Help to Buy Mortgage’ branding.
While much hyped, the main Help to Buy scheme (ie, not the original only for new builds) is about the Government giving LENDERS a guarantee to enable them to offer more 5% deposit mortgages, meaning more are available. If you’re looking for a 5% deal, it makes no difference to you whether it’s a Help2Buy or not. Just go for the best available.