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First Time Buyer
If you're buying a home for the first time, there are many choices and decisions you need to make in areas where you might have little or no experience, but you need to have a good understanding of the issues involved to ensure that you get it right.
Buying any property is a big decision, with consequences. But with careful thought, planning and preparation there should really not be too much to worry about.
Finding the money
It's a really good idea to get your finances sorted out before start looking seriously for a home to buy. Most people who buy their own home will finance the purchase with a mortgage, so you need to find out exactly how much you can afford and the maximum you can borrow. If you have some savings, this will not only increase the amount available to spend on a property, but it can also be used as a deposit and this may be essential. Make sure that your savings are in an account that you can access easily, because you may need to produce a cheque at short notice once you start the actual buying process.
A mortgage is just a special kind of loan which uses the property itself as security. Although you become the legal owner of the property, the mortgage lender (known as the "mortgagee") will also have what is called a legal "interest" in the property and effectively becomes almost like a joint owner, with the right to sell the property if you are unable to keep up your mortgage payments. This is a legal arrangement and there many important issues you need to understand, so you really need professional advice before getting involved with a mortgage.
There is no fundamental difference between a "first time buyer mortgage" and any other mortgage, but many lenders have packages that are tailored to attract this kind of business and there are always special offers available, so shopping around is essential. Lenders frequently offer special incentives to first time buyers and the kind of benefits to look for are:
* Borrow up to 100% of your property value, no need for a deposit
* Cash back on completion of your mortgage, giving you money to spend on your new home
* Free valuation, reducing your up-front costs
* Discounted rates to keep your monthly repayments down
When considering the benefits being offered, you also need to check whether "early repayment" charges would apply if you sell the property within a specific time period, also if higher lending charges might apply. The first time buyer package might be perfect for you, but also look at their standard packages to compare.
Mortgages are offered by all the high street banks and building societies, so start at one end of the road and work your way along. You will soon figure out how the system works and what you need to do to get a loan. Expand your search by looking on the internet and you will see that there are hundreds of providers out there, but many of these are trying to sell you an instant deal, which you may not be ready for yet.
The other option when looking for a mortgage is to try using the services of a mortgage broker, preferably one who is independent and able to offer you a wide choice of mortgages from more than one lender. Often brokers also have access to special deals that are not always available from high street lenders. The broker may charge a fee for their services, but they are legally obliged to explain all of this to you, so there should be no hidden surprises. Mortgage brokers are not only specialists who can help you decide what kind of mortgage is best for you, but may also be able to offer you other financial advice relevant to the purchase, such as insurance.
Last, but not least, if you are thinking about buying a brand new home from a builder, the larger developers often have special mortgage arrangements, especially for first time buyers. Visit the show home and speak to the salesperson. Once they know that you are a serious buyer they will make a huge effort to help you find the money and may well recommend a broker who they know and can sort out most problems.
To contact a specialist mortgage broker click here for independent mortgage advice and quotation.
NOTICE: A mortgage is a loan that is secured on your home and you also need to think carefully before securing any other debts against your home. Your home could be taken away by the lender and sold if you do not keep up the repayments on the mortgage or any other debt secured on it - if you are in any doubt, seek independent professional advice. These notes are offered as a general guide only and do not constitute mortgage or legal advice.
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