The First Step is Always The Hardest – A First-Timers Guide to Getting a Mortgage

For those of us taking our first tentative steps on the property ladder, securing a mortgage will constantly be at the forefront of our minds. But the amount of mortgage options on offer can be rather daunting (to say the least). If you want to get the best mortgage deal possible though, you’re going to want to be as clued up as possible, so we’ve collated all of the most pertinent information into this handy guide, a guide that underlines the sentiments expressed by PM David Cameron’s own ‘Help To Buy’ scheme.

Help to buy is a scheme that was instigated last year and offers lenders a guarantee against losses on properties where a home owner puts down more than a 5% deposit, allowing home owners to secure a mortgage without having to put down an unrealistically large deposit.

Whilst this scheme has made it easier for first time buyers however, it’s still far from a stress free process.

The First Steps

Before you even start considering a mortgage you should really make sure your finances are under control and make a note of exactly how much of a deposit you can afford. Consider not only how much money you have in the bank or your salary but also your credit rating, as a poor credit rating will leave you with fewer options. You might want to carry out a credit check on yourself, but be wary, as if you do this too often, you’ll leave a negative credit footprint. There will also be fees and insurance to consider that could rack up into the thousands as well as the costs of actually furnishing and maintaining your new home, so just because you can afford your deposit, that doesn’t necessarily mean you’ll be able to afford your whole mortgage down payment.

The Big Deposit

Whilst the initial deposit isn’t the only expense to consider, it is the biggest one and the size of the deposit you can afford will directly influence the value of your property and how large of a percentage of that property’s value you can put down. Traditionally the benchmark figure has always been 25% of the property’s value, but for the very best rates you’re going to probably need at least 40%. Conversely if you simply can’t raise those kind of lofty amounts there are deals available for those who can only afford to put down as little as 5% of the property’s value and since the ‘Help to buy’ scheme was implemented, these lower percentage deposits have become far more realistic.

Getting The Right Mortgage For You

The sheer amount of options (hundreds, or thousands in fact) will more than likely prove quite daunting but as long as you do your research you should at least be able to make an informed decision. There are numerous website that can be used as a reference when doing your research such at ‘This is Money’ and ‘cbonline‘ or you could take it one step further and talk to a mortgage broker.

Hiring A Mortgage Broker

A mortgage broker won’t be able to arrange the mortgage for you but they will be able to talk you through the options in a language you’ll understand and offer you informed advice that will come from years of experience. The broker will look over your finances and will help you look at the overall cost of all your potential mortgages (including all the hidden costs), then they will use this information to help you choose a mortgage that suits your situations. They might even do the lion’s share of the paperwork for you and may be able to offer exclusive deals if they have decent, long-standing links with certain lenders. Of course many mortgage brokers might charge a premium that you simply cannot afford so remember to ask them directly how and how much they stand to be paid and don’t be afraid to let them know you’ve had a better deal elsewhere. As with all parties working within the real estate industry, mortgage brokers can be incredibly competitive individuals.

To Fix Or Not To Fix?

When you decide on where to get your mortgage your next job will be choosing between a variable rate or a fixed rate mortgage. The main question you’ll need to ask yourself is whether or not you think a fixed rate would be a good idea. It’s worth noting that whilst a fixed rate mortgage might be more expensive initially, as interest rates rise it will remain the same and so could end up saving you money in the long run. Variable rate deals on the other hand will be cheaper to begin with but will increase as interest rates do likewise. As a first time buyer, a fixed rate mortgage is generally a safer bet but it really depends on the specifics of the offer (something a mortgage broker would be able to help you with).

How Long Will It Take?

There is no definitive answer to this question as it will depend on both the lender and which mortgage you’re asking for but generally the whole process will take between 2 weeks and 4 weeks.

Your Author Melissa Barber has just started to consider her own very first mortgage and hopes her research has been able to help others in the same boat.