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First time buyers are especially
vulnerable to taking out unsuitable or expensive mortgages – simply because
they haven’t the experience to know any better. This can lead to years of
higher than required payments or penalties – so if you’re just taking your
first steps onto the property ladder it’s worth looking around and comparing
the many different types of mortgage deals and lenders. It could save you
thousands in the long run.
Remember that the mortgage industry
is highly competitive – so lenders are fighting each other off with sticks to
get your business. It’s a good position to be in, so you can probably find a
very good deal that’s perfect for you when you shop around a little.
You’ll also find that quite a few lenders actually
target first time buyers – this means they will offer you a special deal,
possibly for the first year or two of your term if you take your first mortgage
out with them. It’s certainly worth trying to shortlist mortgage deals that
have special offers for first time buyers so you can compare them to the rest.
Here are a few things that first
time buyers may wish to consider before taking out their first mortgage:
1.
Take heed of circumstances. Will a fixed or variable rate be best for
you? Will you suffer if the rate moves up to the point where you may not be able
to cope with repayments?
2.
How much do you need to borrow? What level of deposit can you come up
with? 100% mortgages are available but many times require a mortgage indemnity
guarantee (an insurance policy that lenders will try and force first time buyers
into signing if they have zero or a low deposit).
3.
Collect as much information about special first time buyer mortgages to
see if you can get a special rate that may be unavailable to non-first time
buyers.
4.
Remember that if you choose to leave the mortgage before it’s term runs
out you may be subject to redemption penalties – this can be about 5% of the
loan value when you leave early so read the fine print carefully.
Ultimately, your first home purchase is a huge step –
and getting the best mortgage available is very important part of the process.
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