First-Time Buyer Mortgages

There are a number of schemes available for first-time buyer mortgages, and here are the latest:

First Homes Scheme: This scheme offers a 30% discount on the market value of a new build home for first-time buyers. The scheme is designed to help people onto the property ladder and aims to make new homes more affordable. Eligibility criteria and the availability of the scheme may vary by area.

95% mortgage scheme: The UK Government has agreed to underwrite part of the loan for first-time buyers to purchase a property with a deposit of just 5%. This means that mortgage lenders can offer more high loan-to-value mortgages, making it easier for people to get onto the property ladder.

Lifetime ISA: This is a savings account designed to help people save for their first home or retirement. First-time buyers can save up to £4,000 per year and the government will add a 25% bonus to the account. The money can be used to buy a home worth up to £450,000.

Shared ownership: This scheme allows first-time buyers to purchase a share of a property (between 25% and 75%) and pay rent on the remaining share. Over time, buyers can choose to purchase a larger share of the property, which is known as staircasing. Shared ownership properties are usually offered through housing associations.

As a first-time buyer, there’s a great range of first-time buyer mortgages to suit your circumstances and your budget and to help you get on the first rung of the housing ladder.

As you’re new to the housing market, you may well be offered incentives or cashback schemes to encourage you to apply for a mortgage with them. The deposit you’ll need for a first-time buyer mortgage could be as low as 5% although, again, you’ll need to meet the relevant criteria to show you can afford your mortgage repayments.

You’ll also need to consider what type of first-time buyer mortgage will be right for you. There are several that you might be offered – your mortgage adviser will be able to talk you through the mortgage product that’s right for you, but here are the key features of each:

• A fixed-rate mortgage is a sensible option for first-time buyers because you’ll pay the same monthly payment for as long as your fixed-rate period lasts. After that you can apply for a remortgage to secure another good deal. If you overpay or leave the deal early, you’re likely to pay a penalty, but the rates are usually lower than a variable rate deal.
• Variable rate mortgage monthly repayments are linked to the bank base rate so, when rates are low, your repayments will be low too, but you’ll pay the price should rates rise. Tracker mortgages and discounted rates are also guided by the bank base rate.
• Offset mortgages offset the interest on your savings against your mortgage – talk to your mortgage adviser to check if this is the best use of your savings.
• A repayment mortgage means that every monthly payment you make will go towards paying the capital sum you’ve borrowed until you own your home outright.

As a self-employed first-time buyer, you may have some additional hurdles to overcome when it comes to getting a mortgage. Lenders will typically require more documentation and proof of income, but there are options available to help you secure the funding you need.

When purchasing a property, there are several additional costs that first-time buyers need to consider. Here are some of the main ones:

• Stamp Duty: This is a tax that you pay when you buy a property above a certain price threshold. As a first-time buyer, you don’t have to pay Stamp Duty up to a purchase price of £425,000 . For homes priced above £625000, you’ll need to pay Stamp Duty. Please Call one of our advisors for any questions or advice.
• Arrangement fee: This is a fee charged by your lender to cover the cost of arranging your mortgage. It can be paid upfront or added to your mortgage borrowing.
• Valuation fees: Your lender will want to value the property you’re purchasing to make sure it is adequate security for them to lend against. The cost of this valuation is typically paid by the buyer.
• Solicitor fees: You’ll need to hire a solicitor or conveyancer to handle the legal aspects of your property purchase. This can include tasks like searches, contract drafting, and transferring funds. Solicitor fees vary depending on the complexity of the transaction and the location of the property.
• Survey fees: It’s important to get a survey of the property you’re buying to check for any structural issues or defects. A homebuyer’s report or a building survey can cost several hundred pounds.
• Broker fees: If you choose to work with a mortgage broker to find the best deal, they may charge a fee for their services. This fee can be a percentage of the mortgage amount or a flat fee, and it’s typically paid by the borrower.

When you’ve made the decision to move to a new home or remortgage your existing property, getting the mortgage deal is likely to be at the top of your list of wants. By far the most effective way of securing a good mortgage rate from a trusted provider is to talk to an expert mortgage advisor. A good mortgage specialist will have access to the most competitive rates available on the market and be able to find a deal that’s the right fit for you and your circumstances.

Before you start house-hunting, you’ll need to do some groundwork to assess how much you can afford to spend on your new home – remember to include your deposit, legal fees and Stamp Duty, etc. When you have an idea of what you need to borrow, you can then work out what your mortgage payments are by using our mortgage repayment calculator.

By talking to a specialist mortgage adviser early on in the process, you’ll get all the advice you need on the mortgage product that’s right for you. Your deposit, your age and having a joint borrower may determine the rate and the term of your mortgage.

You’ll need to decide which type of mortgage you’d like, such as a fixed-rate, variable rate, first-time buyer, repayment or interest-only mortgage. There may be fees, penalties and, of course, incentives available that could also sway you towards a particular product too.

When you’ve found the right mortgage product, your mortgage adviser will get the ball rolling and, when you’ve found your dream home, the next exciting step will be to make your offer.

No matter where you are in the house moving process, talk to our team of expert mortgage advisors and we’ll guide you through it all. Call us on 03454 500200 or click here to make an enquiry.

When it comes to deciding whether to buy a freehold or leasehold property, there are several factors to consider. It’s important to weigh the pros and cons of both options:

Freehold Property

Pros:

• Ownership: As a freeholder, you have complete ownership of the property and the land it sits on, giving you full control over any decisions related to the property.
• No ground rent: You won’t need to pay any ground rent, which can be a substantial long-term saving.
• Resale value: Freehold properties tend to be more attractive to potential buyers and can have a higher resale value than leasehold properties.

Cons:

• Cost: Freehold properties are typically more expensive than leasehold properties, as you are buying both the property and the land it sits on.
• Responsibility: As a freeholder, you are responsible for all repairs and maintenance to the property and land, which can be costly.
• Planning permission: Any alterations to the property or land may require planning permission from the local council, which can be a lengthy and expensive process.

Leasehold Property

Pros:

• Lower upfront cost: Leasehold properties are generally cheaper than freehold properties as you are only purchasing the right to live in the property for a certain period of time.
• Maintenance: Maintenance and repairs to the building are usually the responsibility of the landlord, which can save you money in the long run.
• Amenities: Many leasehold properties come with communal amenities such as gardens, gyms or parking spaces, which you may not have access to with a freehold property.

Cons:

• Ground rent: You will be required to pay ground rent to the landlord, which can increase over time and may be subject to additional fees and charges.
• Restrictions: There may be restrictions on what you can and cannot do with the property, such as having pets or subletting, which can limit your freedom as a homeowner.
• Short lease: If the lease has a short time remaining, it can be difficult to obtain a mortgage or sell the property in the future.

When taking out a mortgage, it’s important to understand the difference between repayment and interest-only mortgages.

With a repayment mortgage, you pay back both the amount you borrowed (the capital) and the interest on that capital over the term of the mortgage. This means that at the end of the term, you will have paid off the entire mortgage and own your home outright.

With an interest-only mortgage, you only pay the interest on the amount borrowed each month. This means that at the end of the mortgage term, you will still owe the full amount you originally borrowed.