First Time Buyer Mortgages

first time buyer mortgages

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Fee Free First Time Buyer Mortgage Broker

Buying your first home is an exciting prospect, but figuring out how to get onto the property ladder can feel overwhelming. There are a lot of different terms thrown at you from the second you start looking at mortgages: fixed rate, variable rate, tracker rate, repayment mortgage, interest-only, mortgage term, deposit, loan-to-value (LTV) – and this is all jargon people expect you to already understand.

By talking to Alexander Southwell Mortgage Services Ltd., not only can you be assured of getting a suitable mortgage deal based on your needs, circumstances and preferences. We will calculate exactly how much you can borrow, how much everything will cost, and walk you through the entire purchasing process from start to finish. We also do all the paperwork.

What’s more, we will never charge you a penny for our service – we’re 100% Fee Free Mortgage Broker.

We have exclusive First Time Buyer mortgages to help make buying your dream home a more affordable reality, you have peace of mind we will find the best mortgage for you.

How can you find out how much you could borrow?

There are many calculators online which you can run your details through and it will produce an estimate of your affordability, we would not recommend using these as a lot of the time the affordability calculators are not accurate. At Alexander Southwell our advisor will calculate exactly how much you could borrow based on your personal circumstances, and what that would cost, whilst explaining the purchasing process in simple terms – no jargon!

How much deposit will I need?

The more you can save for your initial deposit, the less you’ll need to borrow towards your purchase – and the better chance you’ll have of securing more competitive mortgage rates. The minimum you will need is 5% of the price of the property you want to buy. This will leave you with a loan to value (LTV) ratio of 95% – the lowest accepted by most lenders. If you can save 10% or even 15% of the purchase price, this will stand you in much better position with a wider pool of lenders. If you have saved 20% or more, you will have access to some of the best rates on the market, which means you will pay considerably less in interest to your lender over the course of your mortgage term.

What is an agreement in principle?

An agreement in principle is effectively a pre approved mortgage offer. To get an agreement in principle your mortgage broker will aproach a suitable lender and the lender carries out a credit check to make sure you are credit worthy to be able to take a mortgage with them. They will also let us know the amount you are able to borrow based on the information we input. This can also be called a decision in principle or a mortgage promise. Once we have the agreement in principle this puts you in the perfect position to apply for a mortgage.

What mortgage types are best for first time buyer mortgages?

Despite all serving the same purpose (i.e. lending you money to buy property at a given rate of interest that you’ll need to pay back over time), there are many different types of mortgage available to consider when buying your first home. These include:

  • Fixed rate mortgages
  • Variable rate mortgages, which include
    • Tracker mortgages
    • Discounted rate mortgages
    • Capped rate mortgages
    • Offset Mortgages
    • Flexible Mortgages

Being a first time buyer we will consider your full situation but 95% of the time there are only 3 types of mortgage products which will be relevant to yourself (Fixed Rate Mortgages, Variable Rate & Tracker Mortgages). If you feel it would be a good idea for further information of the other types of mortgages and it could help you please ask our mortgage advisers.

How Does a Fixed Rate Mortgage work?

Popular with first-time buyers, and everyone else in times of uncertainty, is the fixed rate mortgage. Again, this does what it says on the tin, namely that the rate will be fixed for a certain period of time so you will know exactly what your monthly repayments will be. This timeframe can vary from two years at the lower end, all the way up to 10 years in some instances.

Once the fixed rate has been completed, the mortgage will then revert to the lender’s standard variable rate (SVR) and you’ll be able to switch lenders or apply for another fixed rate term with your existing provider should you wish to do so.

The big negative with fixed rates are should mortgage rates drop, you’ll be left paying off your loan at the higher rate while others enjoy a drop in their monthly payments. Not only that, but you’ll be tied in for the duration of the term as well, meaning that if you decide to pay off, switch, or terminate the mortgage before the timeframe has elapsed, you’ll have to pay an early repayment charge.

How does Variable Rate Mortgages work?

Lenders will have a standard variable rate which they base all of their other products around, and it’s this rate of interest that your fixed rate mortgage will revert to once the fixed period comes to an end. This is the lender’s basic mortgage.

The ‘variable’ aspect applies to the interest rate charged on the money you borrow, and that can go up as well as down. These mortgages are loosely hinged around the Bank of England’s base rate, but they’re also subject to the lender’s own criteria, too. This means that your rate could increase even if the BoE’s rate stays the same.

How do Tracker Mortgages work?

We find Tracker Mortgages can sometimes be quite popular with first time purchases, as the name suggests, track a nominated interest rate (usually the Bank of England base rate), plus a set percentage, for a certain period of time. When the base rate goes up, your mortgage rate will rise by the same amount, and if the base rate falls, your rate will go down. Some lenders set a minimum rate below which your interest rate will never drop (known as a collar rate)but there’s usually no limit to how high it can go.

The big selling point with some of these rates are they tend to provide lower interest rates than the variable rate and some of them do not have early repayment fees attached to them, so this appeals to first time buyers who might not be planning on staying in there property for a long time

Help to Buy, Shared Equity & Government Schemes – Mortgages for a first time buyer

Our mortgage advisors have access to thousands of first time buyers offers, and we don’t just find you a cheap deal – we’ll find you the right deal, tailored to your needs and taking into account anything the future might have in store.

Help To Buy:

Your expert advisor will also discuss the national Help to Buy scheme, which is for first time buyers purchasing a new build home, and may allow you to buy a better home than you initially thought possible.

In addition, your advisor can also guide you through low cost and affordable housing schemes provided by the local UK government which allow customers to get a foot on the housing ladder with as low as a 5% deposit whilst retaining 100% home ownership.

Shared Ownership:

The shared ownership scheme was introduced by the government to help families on lower incomes to become homeowners. Shared ownership homes are provided through the housing association. They work by offering buyers a share of the property ownership and then paying rent on the remaining share. Typically you can buy between 25% and 75% share. This in turn could also provide you with a lower monthly payment.

You’ll need a mortgage to help buy the share of the property, but much like the government’s help to buy scheme you can put a smaller than average deposit, this will help you get a mortgage, a lot of the time you will only require a 5% deposit instead of forking out a much larger deposit like 10% – 20%. This is based only the part of the property that you are purchasing and not the full price.

Buyers have the opportunity to increase the share of the property they own, either by borrowing more from the lender and increasing the size of their mortgage or by making a large cash payment, this process is known as “Staircasing”.

With AS Mortgages our expert advisors have access to exclusive deals from hundreds of lenders, buying a home has never been easier.

Just find the home you love, and we’ll do the rest.

Im a first time buyer, what other costs are there to consider other than the deposit?

When you buy your first home property it can be expensive, however modest your new home. A mortgage is not the only expense. Before you buy a home or go out viewing properties we would work out how much you would need in total, this is not all about you being able to afford the monthly payments, there are also extra one-off charges and fees you’ll come up against. When working out your budget, you need to be sure you have money ready to pay them.

These include:

  • deposit
  • mortgage arrangement fee (these can normally be added to your mortgage balance)
  • valuation / survey fee
  • legal fees
  • Stamp Duty or land transaction tax, depending on where in the UK & purchase price
  • removal costs

And don’t forget once you’re in your home, there’ll be regular ongoing bills you’ll face as a homeowner, on top of your regular mortgage payments, such as:

  • council tax
  • bills
  • house insurance
  • repairs and decorating
  • furnishings

It is alway worth discussing the full move with your mortgage advisor and they can advise how much you would need to save before applying for a mortgage

Can we get a first time buyer mortgage with adverse credit?

While you might face difficulties obtaining the home loan you need from one of the mainstream lenders on the high street, with the help of an experienced bad credit mortgage broker, you should be able to access suitable products and deals offered by the many specialist mortgage lenders in the UK market today. The interest rates might not be as favourable as the high street but we will run through a budget planner with you making sure you feel comfortable before we apply for a mortgage.

If you are purchasing your first home with someone else on a joint mortgage, unfortunately the lenders will use the lowest credit score between the both of you.

Want to check your credit file? Click here to get your free credit file.

At Alexander Southwell, we recommend Check My File for your credit report. Their reports show information from four credit reference agencies, whereas others may only show information from one or two. Their reports give you and us a full picture of how lenders are likely to assess your application.

In order to obtain your report, click on the above link to get a 30 day free trial with CheckMyFile and download your report, after the free 30 day trial they will charge £14.99 per month & this subscription can be cancelled anytime.

Using a mortgage expert can prove invaluable – First Time Buyer Mortgage

Alexander Southwell Mortgage Services Ltd. search through a comprehensive range of mortgage products for First Time Buyer mortgages to help make buying your dream home a more affordable reality.

Our advisors are experienced and know the criteria each lender uses to assess your first time buyer mortgage application. This is crucial in knowing which lender is best to recommend.

Our mortgage broker services doesn’t stop there…

Your mortgage advisor understands that the mortgage application and discussing your mortgage deals is just one aspect of buying or remortgaging a property.

We can advise on Solicitors, help you understand survey reports you may have consider, provide you with background information on the property you are considering buying, and liaise with any estate agency or builder involved.

We can advise and arrange Life Insurance, Income protection or Home Insurance, again offering the best possible deal available to you.

Jamie Alexander Mortgage Broker & Advisor
Jamie Alexander
Jamie is an experienced Mortgage Advisor with a demonstrated history of working in the financial services industry. He’s skilled in Financial Services, Negotiation, Insurance, Residential Homes, and Residential Mortgages. For mortgage advice get in touch with Jamie via the website contact form.
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