Paying for a home is an uphill task for most people. Property prices are ever increasing and are quite high even at the moment. For first time buyers, these property figures can be quite daunting. It’s for this reason that many seek to get mortgages where lenders foot the bill and they get to repay the balance over a period of time.
Mortgages are a good way to make home ownership come true due to a number of reasons. For one, the interest rates on mortgage plans are way lower than that of bank loans. At the moment, these rates are at between 1-4%. Two, mortgage plans afford one the comfort of buying the house over a period of many years, mostly 20-30 years. This way, buyers do not have to stretch their finances too much. There are also many lenders in the industry so the competition works in favour of the buyer.
When taking out a mortgage as a first time buyer, the lender will first have to ensure that you are capable of repaying. This will involve looking at your income(s), credit history with other loans and credit cards and the value of the house you intend to repay.
When choosing a mortgage plan, look for packages that offer lower rates. There’s always an introductory rate which is usually priced lower. This is usually charged for the first 2-10 years. After that the rate usually increases depending on market conditions. The rates may go up or down depending on this. One has the option of remortgaging around this time if they feel they can get a better deal with another mortgage plan.
Once one has a mortgage plan, it’s important to make timely payments to avoid penalties. Also, the higher the deposit you pay at the beginning, the less the rates and fees. The same applies to the duration of the mortgage term. Those who pay their mortgages over a shorter period pay less because interest accrues each year.
The government and mortgage lenders have schemes that encourage first time buyers to take the bold step of owning their first home. At the moment, the government has schemes such as the Help To Buy mortgage and NewBuy scheme. These are aimed at helping first time buyers raise the deposit required and pay lower rates. Lenders also offer competitive rates for first time buyers, usually at lower rates than those remortgaging or taking up a second home.
Other advantages of being a first time buyer include having a longer time to repay the mortgage. This is because one is relatively younger and therefore has more years ahead before retirement. This makes it easier for them to repay quicker. First time buyers can also enjoy being applicable to most mortgage packages on offer.