The First-Time Buyer Mortgage Guide

Getting your first mortgage is exciting – but it can also be stressful and even overwhelming, especially with all the choices you face.

Where should you start? How much can you afford? Which type of mortgage is right for you?

In the third post in our ‘Complete Guide to Buying a House’ series, we'll look at all the issues you need to consider.

Know What You can Afford

First of all, you have to work out how much you can realistically afford to pay back on a monthly basis. You should work this out even before you consider your deposit. After all, if you cannot afford to make your monthly payments, your home could be repossessed.

Do this by creating a budget and working out the maximum amount you can pay each month, then use this to guide your decisions when choosing a mortgage.

Also, work out the amount that you will likely be able to borrow based on the size of your deposit and how much you earn. You can use a mortgage calculator to get a rough idea.

This is also the time to find out what your credit score is like because this will be taken into account when you apply for a mortgage. If you have a bad score, it could affect how much you can borrow, so it’s good to know this as early as possible.

Know the Costs Involved

Once you have worked out how much you can afford to borrow and pay back, you should also consider the other costs. Your deposit is the major cost, and you will need an absolute minimum of 5%.

There are also lots of extra fees involved when you buy a property, many of which are related to your mortgage such as:

  • arrangement fee
  • booking fee
  • valuation fee

This guide won't go into details on these areas because we cover them in the two previous posts in the series:

Types of Mortgages

Once you've done the preliminary work, it's time to look at the types of mortgage available. There are two main types of mortgage: fixed and variable

Fixed-rate mortgages are where the interest rate is fixed for a period of time, which could be anything up to 10 years. After that, the rate is likely to increase.

These provide you with peace of mind because you know exactly how much you will pay for a certain period of time. However, they often come with penalties if you want to repay your mortgage early.

Variable-rate mortgages are usually the cheapest deals. The interest rate changes with these, and the lender can change the interest at any time, so there is more risk.

Tracker-rate mortgages have a starting interest rate that then changes based on the Bank of England’s base rate, so it is linked directly to this rate. When the base rate rises, your payments go up.

Choose a Mortgage Provider

Once you know about the different types of mortgages, it's time to start looking at the different providers and their various mortgage products. You can do this by visiting their websites individually, or you can use a comparison website to get you started.

Keep a spreadsheet with all of the details, and once you find one that looks right to you, consider applying.

Get Help from a Mortgage Advisor

Because there are so many mortgages to choose from, many home buyers get help from a mortgage advisor to save time and help find the best deal.

At Ezylet, we have teamed up with the Mortgage Advice Bureau. Their specialists can provide you with advice on the types of mortgages that are best suited to your situation, saving you time on the process and helping you to end up with the right mortgage.

Start Looking for Your Mortgage

Looking for a mortgage can be a time-consuming process, so it makes sense to start your search early. Follow the steps in this guide to work out how much you can afford and find out what’s available, then consider getting some help from a professional advisor to find the right mortgage for you.

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