OPTIONS FOR THE FIRST TIME BUYER

As a first time buyer you will find that there are many mortgages which are targeted directly at you and as such are designed to specifically help new borrowers buy their first home. If you are currently looking for a first time buyer mortgage in the UK then you should look closely at the options listed here. Give us a call if you have a question or just want some advice from a broker.

100% Mortgages

A 100% Mortgage is required when you do not have money for a deposit and you therefore need to borrow the full purchase price of the property.

Often a 100% mortgage may be the only option if you want to get on the property ladder quickly. There are not so may lenders who offer 100 per cent. You do have to watch out for higher interest rates, but the good news is that one hundred percent mortgages are now not as expensive as they used to be.

However, as well as paying more in interest you may also have to pay a Higher Lending Charge (aka Mortgage Indemnity Guarantee premium), but which you may be able to add to the mortgage.

Guarantor Mortgages

If you have a close family relative who is able to guarantee your mortgage payments you be able to borrow more than your standard income multiple would normally allow.

As an example if you earned £25,000 a year and wanted to take out a mortgage on a property worth £125,000 a traditional lender may be prepared to lend a maximum of say four times the borrower's income, in this situation £100,000.

With a Guarantor Mortgage you might be able to apply for a loan worth the whole £125,000 providing a close relative was prepared to act as a your guarantor.

This would be a great advantage for anyone whose parents are prepared to help them get on the property ladder.

Buy with Friends

As a single person it can be almost impossible to get a mortgage as the lenders will only look at your salary and not two salaries as in the case of a couple. Getting together with a friend or friends to buy a property can make good financial sense, as more than one salary would be taken into account. The interest rates may be a little higher but at least you will be able to buy your first home.

If you go down this route make sure you get a solicitor to draw up a contract between you all to ensure that everyone’s responsibilities are clearly understood and agreed, especially in the situation where someone may want to sell up.

Housing Association Mortgage

There are new schemes available in which you only own part of the property. The rest of the property is owned by a housing association and you pay them rent for the part that they own

You will only need to arrange a mortgage for the part that you own and as time goes by you can purchase more of the property until eventually you own all of it.

Key Worker Mortgage

The key worker living programme is a government scheme targeted at key public sector workers, such as nurses, teachers and police officers, to help them buy or rent a home near to where they work. Key worker mortgages can be extremely helpful to those having to live in the more expensive areas of the UK such as London and the South East.