Your mortgage is likely to be your biggest monthly outgoing, so it’s important to get it right. We spoke to London & Country Mortgages about some of things to consider as a first time buyer and how to decide which is most suited to your circumstances.
What are the steps first-time buyers should take when considering buying a new home and taking out a mortgage?
One of the first things to consider as a first time buyer is to work out a budget, so you know exactly how much you can afford to spend on your new home. You will need a deposit of at least 5% of the property value to secure a mortgage.
Lenders will look at a wide range of factors when deciding whether to offer you a mortgage, but the more you can do to reduce your outgoings and build up your savings, the better your chances will be of having your application accepted.
See also: Choosing a Mortgage
What are the different types of mortgage I can take?
There’s a huge range of mortgages to choose from, there are various things to consider as a first time buyer so it’s important to think about what your priorities are before choosing one. For example, if you want peace of mind that your mortgage payments won’t change over time, a fixed rate deal might appeal.
Variable rate deals come in several different forms. Tracker mortgages, for example, track the Bank of England base rate, plus a set percentage for certain period, so if base rates fall, your mortgage payments will too, whereas if they rise, your payments will increase. Discounted mortgages, meanwhile, offer a discount off the lender’s standard variable rate for a set period. With so many different options to choose from, it’s a good idea to seek advice from an independent mortgage broker who can help you decide which type of mortgage is right for you.
What is the difference between a survey and a valuation?
Choosing a specific survey is a vital thing to consider as a first time buyer; a survey is there to help unearth any structural issues with the property you are buying, such as damp or subsidence. There are several different types of survey, ranging from those which give you a very brief assessment of the property’s condition, to more comprehensive reports which go into much more detail.
A valuation, however, will only tell you what the property you are buying is worth. You will need to arrange one to get a mortgage, so that the lender can be certain the property you are buying is worth at least the amount they are going to lend to you.
What can I do to ensure I get the best deal when buying a new home?
However much you’ve fallen in love with a property, don’t automatically offer the vendor the asking price. As a first time buyer you should think carefully about any drawbacks the property might have, such as being on a busy road, and use these to try and negotiate a good deal. It’s also worth checking online to see how much similar houses in the same area have gone for to help you establish whether you’re paying the right price.
See also: Mortgage Masterclass
I want to remortgage my home how can I find out the value of my house?
When you remortgage, the lender you have chosen will require a valuation of your property. They will usually arrange this on your behalf, as a valuation is required by law before they can offer you a mortgage. Some mortgage lenders offer a free valuation with selected deals, but if they don’t, you will have to cover the cost yourself. Valuation costs can vary widely, but will typically set you back around £300.
When is the best time to remortgage my home?
The best time to think about remortgaging is soon before your existing deal finishes. When that happens, you’ll usually roll over automatically onto your lender’s standard variable rate, which is typically much higher than the best remortgage deals. If you start to look for remortgage deals a few months before this happens, you should be able to move onto your new deal as soon as your current deal ends. Make sure you don’t remortgage before your current deal ends though, as you could potentially face hefty early repayment charges.
Will the amount of equity I have affect my mortgage?
Equity is the portion of your home that you own outright, so it is essentially the difference between the value of the property and any remaining mortgage you have on it. For example, if your property is worth £350,000 and you have a mortgage for £150,000, then you would own £200,000 of equity in your home. The greater the amount of equity you have, the wider the choice of mortgages you will have available to you, so if you’re saving to buy a home, always try to put down as big a deposit as possible.
London & Country Mortgages Ltd is the UK’s largest fee free mortgage broker and adviser. Their team of expert mortgage advisers are on hand seven days a week to provide customers with tailored mortgage solutions that fit. To find out more about their services, visit their website: landc.co.uk
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