Chances are if, like us, you've been renting for years you probably don't know much about mortgages. I will admit it was probably the thing I found most worrying about buying our new house as I wasn't sure I'd ever be able to understand what we were doing.
Here are a few tips for your first time
Before you start, sit down and take a good look at your finances and work out what you can afford. When you apply for your mortgage, lenders will check you are able to make the monthly repayments. Don't forget that the expense of owning your own home isn't just about finding money for a deposit and paying a mortgage. You'll also need money for Stamp Duty Land Tax, Solicitors fees and Building Insurance amongst other things.
Affordable Housing Schemes
As a first time buyer you may be able to take advantage of an affordable housing scheme to help you out. There are a few to consider but the most popular, and the one we took advantage of, is Help to Buy. Help to Buy is a Government scheme that enables you to put down a 5% deposit, making owning a home more affordable. If, like us, you are looking to buy a new build you can borrow up to 20% of the purchase price interest free for 5 years.
Whatever scheme you choose make sure you read the terms properly before committing and understand fully what is expected of you in terms of repayment and interest.
What is a Mortgage?
A mortgage is a loan taken out against a property that is secured against the value of your home until it's paid off. Most run for 25 years, but the term can be shorter or longer depending on your circumstances.
You can apply for a mortgage directly through a Bank or Building Society but there's also the option to use a financial advisor who can compare different mortgages on your behalf and give you advice on picking out the best one.
Mortgages can be fixed or variable. A fixed rate mortgage you will be paying the same amount each month for a period of time (usually two to five years) and a variable mortgage the rate you pay will move up and down in accordance with your lenders underlying mortgage rate.
Finding your Mortgage
When you start researching mortgages you will realise that there are many, many different deals to pick from and it's important that you choose the right one for you.
Finding the right mortgage can depend on many different factors so it's worth talking to an expert to make sure you pick a mortgage to suit you.
Check out one of the many First Time Buyer's Guides online and don't be afraid to ask questions! You can't be expected to understand something you've never done before.