Mortgages

First Time Buyers

First time buyer mortgage Before you begin searching for your first property it is important to be sure of the amount of money available. It is a pointless and time consumming pastime looking for properties which will in the end be unavailable to you. The best way to ensure that you are getting the best possible deal is to approach several lenders, or a no-fee broker such as Grovelawn Financial , ask them how much they will let you borrow and request an agreement in principle that confirms this amount.

The rule of thumb is that most lenders will lend you three times your gross annual income. If you are entering into a joint mortgage arrangement then that changes to either two and half times both your incomes or three times the income of the highest earner, plus the income of the other applicant. If you are looking for a self-certified mortgage than you may need to provide three years' accounts. Although a few lenders will lend 95 per cent you should aim to have at least 10 per cent deposit.

Mortgages

Lodgers, Parents, Strangers & Friends

Many people today find that a helping hand from parents is invaluable. Parents are often happy to act as guarantors for mortgages and although this may seem an act of kindness it must be remembered that they will be liable if mortgage payments are not met. First Start from the Bank of Ireland counts as a joint mortgage because first time buyers can borrow up to four times a parents income on top of thier own. Another option is to buy with a stranger. There are organisations that will introduces potential buyers to one another.

A lodger may also come in handy if that spare room looks empty and wasted. Under the 'Rent a Room' scheme from the Inland Revenue the first £4250 you earn from your lodger is exempt from tax. Bradford & Bingley have a rent-a-room mortgage that takes into account the rental value of the spare room when working out how much you can borrow.

 

Britainnia and Graduate Network has a new Share to Buy product which allows up to four people to borrow up to three times each persons salary.

Buying a period property with all the upkeep and maintenance may not be the best idea for first time buyers. For those with a more modest budget it is a good idea to visit new developments as you may find that legal fees up to a certain amount or 'stamp duty paid' could be amongst the incentives on offer. The cost of carpets and fixtures may be negotiable also. buying off plan may also be an option as developers are often keen to sell their cheaper or smaller units to encourage other buyers onto their development.

Points to remember

Mortgages for first time buyers

Be honest about your income — It is a criminal offence if you exaggerate your income when applying for a self cert mortgage.

Don't borrow your deposit — 95 per cent mortgages can stretch your finances. Don't borrow to the limit just because you can. There are often hidden costs to worry about once you've moved in.

Don't buy for an investment — You may not be able to sell it as quickly as you thought.

Get Your Free Mortgage Quote Here