What can you afford?

Before starting your search for a new home, speak to your bank or a mortgage broker to work out how much you can afford. It sounds simple but too many people start searching for a home in the price bracket they think they can afford, without finding out first if this is realistic. Most mortgage lenders require a deposit of a 5% or 10% of the value of the property on top of additional funds (typically between £2,000 - £5,000) to cover expenses from legal fees to stamp duty and survey costs.

When you take out a mortgage, lenders look at a number of things to work out how much you can borrow.  These include your earnings and outgoings, the value of the property and your credit history.

Finding the right mortgage

The two main ways to repay your mortgage are ‘repayment’ and ‘interest only’.  With a repayment mortgage you make monthly repayments for an agreed period of time (the ‘term’) until you’ve paid back the loan and the interest.

With an interest only mortgage you make monthly repayments for an agreed period but these will only cover the interest on your loan.  You’ll normally also have to pay into another savings or investment plan that’ll hopefully pay off the loan at the end of the term.

You’ll also find a range of interest rates to choose from.  Variable and Tracker rates change in line with Bank of England rates, fixed rates are set for a number of years and capped rates have a variable interest rate with a ceiling so your repayments won’t go above a set amount.

Good credit rating?

With the banks maintaining a very cautious approach to lending, ensuring that you have a good credit rating is vital when looking to secure a mortgage. Checking your credit rating is really simple. Click here for your FREE credit rating.  This service not only provides you with your credit score, but it also offers advice on how to improve it – from making sure all credit card payments are made on time to ensuring you’re on the electoral roll.

As a first-time buyer you will find a range of packages and services that are available to you exclusively, via the new homes market. A range of Government-led shared equity initiatives allow first-time buyers to front just a percentage of the full purchase price (as low as 25%) and gradually increase their share over time. This significantly reduces the size of mortgage required and therefore the finance needed to make a purchase.

Developers also continue to offer their own range of deals to help first-time buyers on to the property ladder. Whether it is financial assistance with stamp duty, legal fees paid, attractive shared equity deals or help securing the best mortgage, developers have the finance and expertise to guide you through your first purchase. Click here for the latest deals.