Before you embark on your first mortgage transaction, it’s a good idea to brush up on some of the fundamentals of home finance. Even if you have poor credit and are a first-time homeowner, you will be qualified for a first-time mortgage programme. Although first-time mortgage rates are not strictly higher than those for repeat buyers, many first-time mortgages may result in somewhat higher rates, browse around here.
Your first step should be to obtain free, no-obligation mortgage advice from an impartial first-time buyer mortgage expert. All of the best first-time buyer mortgage offers in the UK will be known to a broker or adviser. A wide range of special mortgages are offered to first-time buyers. A deposit may also enhance the number of mortgage choices available to you, allowing you to locate a better bargain. Because the longer your mortgage is, the more you’ll pay in total, your ultimate goal should be to overpay wherever possible to shorten the duration of your loan.
So, what mortgage alternatives are there for you?
- Mortgage with a Fixed Rate
A fixed rate mortgage, simply put, has a fixed interest rate for a certain length of time. This usually lasts 1 to 5 years, after which the interest rate returns to the lender’s normal rate. Fixed rate mortgages enable you to manage your finances effectively since you know your mortgage payment will not rise for the duration of the fixed rate term.
The only true disadvantage is that when interest rates decrease, you don’t get the benefit of lower payments.
- Mortgages with a Tracker
The interest base rates are followed by this kind of first-time buyer mortgage. In most instances, the interest rate on your mortgage is set at a percentage over the base rate. The primary benefit is that your repayments will decrease when the base rate decreases. When interest rates rise, the opposite will happen.
- Mortgages with a Discount
In that they are variable loans, discounted mortgages are similar to tracker mortgages. A discounted mortgage, unlike a tracker, does not follow the base rate. Instead, the lender’s standard variable rate (SVR) is reduced for a certain period of time.
- Mortgages that are adaptable
This kind of mortgage, as the name implies, enables you to be more flexible with your repayments. You may, for example, pay more or less each month, and in certain instances, even take a repayment vacation. One of the major benefits of this kind of mortgage is the option to pay off large portions of the loan, which you may wish to do if you get a large bonus at work, for example. Self-employed individuals also like this sort of mortgage since their income fluctuates month to month.
- Mortgage with a Rate Cap
These are mortgages that promise that the interest rate will not rise beyond a specific percentage. It usually lasts 1-2 years until the interest rate switches back to a fixed or variable rate.