Your first mortgage is probably the biggest financial commitment you’ll ever make in your life, whether it’s borrowing funds for a house, a flat, or a condominium. The cost of living on your own can be overwhelming to one’s pockets; that’s why it’s crucial to find the ideal mortgage that can meet your needs for years to come.
However, you can’t just get the first mortgage you see, as it’s important to apply for a loan that you can truly afford to pay in the long run. With that in mind, we’ve put together some key things to consider that will help you to get your first mortgage right.
What to Consider When Getting Your First Mortgage as a Buyer
How Much Can You Afford?
When getting your first mortgage, one of the most important things is to look at your income and spending and how you’ll be able to deal with the increased expenses of owning your own home.
Buying a home is a huge decision, both emotionally and financially, and it’s important to consider every cost. A good way to do this is to create a budget. Moving forward, it’s best to input all your current expenses as well as all your future expenses, whether you plan to rent or buy.
How Does First Buyer Mortgages Work?
Getting a mortgage when you are a first time home buyer is a bit different than getting one when you are going to refinance or buy a new, second home. Your credit score, the amount you earn, the down payment, and your home purchase price matter a lot more.
First-time homebuyers take on a lot of responsibility, and part of the difference includes putting down a deposit. In the UK, to get a first mortgage, you need to put down at least five per cent of your property’s value with your own cash.
Important Mortgage Terms You Should Know
Mortgage Interest
Mortgage interest is the cost of borrowing money for a mortgage. Mortgage interest is different from fees, which are separate fees charged in connection with a mortgage loan. You pay this amount monthly to the lender—the financial institution from which you borrowed money—which is the interest on the loan you borrowed to complete the transaction.
Mortgage Term
The term of a mortgage is the length of a mortgage loan, which is the amount of time you’ll borrow money from a lender for a mortgage. A bank or lender gives you a set amount of time to pay them back, known as the term, and the mortgage loan is repaid in a series of regular credits, or payments. A 30-year mortgage term is the most common because it creates the lowest monthly payment.
Mortgage Rates
Mortgage rates are the interest rates you pay when you borrow money from a lender for a mortgage loan. The lower the rate, the less interest you will pay over time. A mortgage rate is expressed in annual percentage rate (APR), based on the cost of funds over a one-year period. An APR is a good tool to compare mortgage rates.
Mortgage Fees
Mortgage fees are the fees you pay to your lender for the closing cost. This includes an application fee and a processing fee. They are handled along with your monthly mortgage payments.
Mortgage Pre-Approval
Being pre-approved for a mortgage is a process in which your lender analyses your income, credit history, and debt to determine the mortgage amount you can afford. Your lender will tell you how much you can borrow before shopping for a home or signing a purchase contract.
The Bottom Line: The Importance of Working with the Right Mortgage Broker for First Time Buyers
Getting the first mortgage as a first-time home buyer can be a bit tricky, especially if you are new to it all. With all the different kinds of available loans, it’s easy to get confused as to which one is right for you.
That’s why it’s important to find a mortgage broker you can trust to guide you and help you find the best deal. The right broker will find the best loan for you and help you navigate the lending process.
Are You Looking for a First Time Home Buyer Loan?
If you’re looking for a loan and you’re a first-time homebuyer, you’re in the right place. A Move Brokers has some of the best mortgage brokers in the UK, so get in touch with us to see how we can help you unlock the home of your dreams.
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.