The most difficult part of mortgaging is frequently the very first step, getting your first mortgage. Difficulties are from both the financial point of view, obtaining the level of deposit if required given the high price of homes lately; also selecting which of the thousands of mortgages available is the right one for you after learning a virtual dictionary of terminology to decide the best way to turn. Once you understand the language and have selected a mortgage advisor everything should fall nicely into place.
What exactly is a First Time Buyer?
This may sound like a foolish question but surprisingly enough different lenders have different interpretations of how this is defined. The meaning can be anything from someone who is most likely fairly young and in their 20's looking to buy their first property to get onto the property ladder, whereas other lenders may see you as a first time buyer if for some reason you have been off the property ladder for over 3 years. So even though you've previously owned property, you could still be seen by lenders as a first time buyer.
Irrespective of your choice of lender and their categorization of you, the most important factor in being approved is naturally your ability to repay your loan. Looking to improve your credit history is the best way to help ensure you are approved for any mortgage applications you make.
Making a deposit on property
This may be your very first home but you will be amazed to find out that you will not always need to find a huge stack of cash and lay down a deposit to secure funding. Many banks and building communities offer 100 percent mortgages; some lenders may even offer as much as 125 percent of the value of the home if you are looking to carry out major improvements however this is obviously very risky.
If you have a substantial deposit available this always works out best for you no matter what. The more you can afford to put down in cold hard cash the better. Making a large deposit is a good idea because you will have to pay interest on less of the cost of your property, and therefore reduce your risks of negative equity where the cost of your loan could outweigh the value of your home.
Getting an Agreement in Principle
Before you have found a property and fallen in love with it, you need to get an idea of how much you can afford, and seek an agreement in principle for this amount. You will then know the maximum price of a house or apartment you can afford and be able to move quicker on closing the deal. You will have various credit checks carried out to ensure you are who you say you are before the lender gives you this large loan. Once you pass the credit checks, you may be issued with a certificate, which you can use to show estate agents and sellers that you're a good prospect with a strong indication of approved funding. It's not a guarantee that you'll be able to buy the house you absolutely want, this will be determined by a valuation on your potential new home to assess its true worth, your address must also be confirmed, as well as proof of your and possibly your spouses monthly income.
Many factors make up the process of financing your first property once you get started, such as working out how much you can afford to repay each month (the amount you can borrow is normally 3 tim times your wage); the lifespan of the mortgage, which people normally opt for 25 years but as people may have gone slowly beyond their means could be as much as 40 years to be able to repay in full; any costs for leaving the mortgage (sometimes put in place to reduce the likelihood you will remortgage elsewhere in a couple of years), do not forget to budget for your legal costs. If you are confused about it all its best to speak to a mortgage advisor who can ensure that you have everything you need.