There is a wealth of mortgage products available on the marketplace, but for those who have never bought their own home before it can be difficult to understand what they should choose. With some key information at your fingertips, navigating first time buyer mortgages needn't be such a maze.
Saving versus debt
Most first time buyers focus on saving as much as they can for the downpayment on their home, often at the expense of paying off other debts such as their credit cards. The fact is however that with the high interest rates on outstanding credit card debts, your ability to save can be slowed down significantly. It's a good idea to pay off these debts first so that in the long run you can save more.
Know your options
The first rule of thumb when looking for the right mortgage is to do your research. Know what is on offer in the marketplace so that you can make comparisons and understand what is available to you. To get a good idea of your loan repayment options as well as the interest rates dependant on your choices, use a mortgage repayments calculator.
Help at hand
Mortgage advisers can be an excellent solution for first time buyers. They have the experience and expertise to steer you in the right direction, plus advise you on mortgages that won't suit you.
Be clear on what you want
More often than not, choosing a mortgage comes down to your attitude to risk. There is no ideal mortgage product for everyone. You might be more comfortable with a fixed rate of payment instead of a variable rate. Be clear on what you want and it will make the selection process easier.
Don't be shy
As a first time buyer, you can't be expected to know the ropes. Since taking out a mortgage is a huge financial commitment, don't be afraid to ask the experts to explain what is what until you're sure you fully understand what is being offered. Whether you're talking to an independent broker or a mortgage lender, they need to explain the mortgage terms and risks until you're satisfied.
The devil is in the details
Reading the small print is something most people hate doing, but since you're taking on such a huge responsibility, it's important you read and understand every detail of your mortgage offer, plus the lender Terms & Conditions.
Don't bite off more than you can chew
While your lender will run checks to make sure you can afford to meet your monthly payments, ultimately you are the one who knows your finances and outgoing expenditures best. Don't make the mistake of overstating your household income or understating your financial commitments every month in your application form – not only is this illegal, you can land yourself in serious trouble when it comes to meeting your monthly mortgage payments. Be realistic and don't try to borrow more than you can comfortably afford to pay back. Also be aware that interest rates can rise and you will need to be able to cover the added cost.
Forward thinking saves money
As a first time buyer, thoughts of your next home move or mortgage are naturally low on your priority list. Bear in mind though that lenders generally offer the best deals for first time buyer mortgages so if you want another one at a later stage you could be forced to take another lender for a better rate, which would cost time and money. It's a good idea to ask a potential lender whether they have any further deals available to you when you reach the end of your agreement.
The above tips should help you steer through the many first time buyer mortgages on offer in the marketplace. Jumping on the property ladder is more difficult these days, but the challenge is worth it to achieve the dream of owning your own home.
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