First Time Buyer Mortgage Advice

A first-time buyer mortgage is a type of mortgage that has been formulated specifically for those who are trying to make their first step into the property market, whether by buying a new house or making your first ever property investment. A range of deals is available for first-time buyers and incentives such as cash-back schemes. Some companies may even offer you 95% mortgages under which you are only required to pay a 5% deposit, and in rare cases, there is no deposit at all. It is essential to remember that with such incentives, there is always a strict affordability criterion you must qualify.

The loan-to-value (LTV) ratio is a share of the property value that your lender is willing to give you. In other words, this is the amount you can borrow for your desired property. For example, if the value of a property is £300,000 and there is a £240,000 mortgage in the property value, this will mean that the LTV is 80%. While assessing the requirements for a loan, lenders consider LTV an essential factor. Most lenders have an 80% LTV available because they want to see buyers invest at least 20% of their savings into the mortgage. Of course, this is not possible for all buyers, especially first-time buyers who prefer to keep their personal investment limited. That is where 95% of mortgages come in handy.

Generally, buyers should have at least 5% saved for purchasing their new home. For instance, if the property you want to buy is priced at £150,000, you will have at least £7500 (5%) saved up as a deposit. However, having more than 5% saved for your deposit can give you access to more exclusive mortgage deals on lower interest rates. Hence, if you can afford up to a 10-20% deposit, it will give you access to better mortgage deals and lower your overall risks. Lenders usually have some of their best deals saved for people who can offer a 30-40% deposit.

The most common costs you need to keep in mind when getting your first mortgage are:

• Mortgage arrangement fees (sometimes charged by lenders )
• Legal fees
• Valuation fees

However, sometimes lenders may offer you to cover some of these costs, so depending on which deal you choose, you may not have to pay all of these. Please talk to our professional advisors about the costs of buying a house to find out more.

If you are considering buying your first home in the UK but are not sure if you are eligible enough to apply, then you should consider discussing your case with one of our mortgage advisors at Care Financial Services.

Mortgage applications start with lenders checking your financial situation to check if you can afford the property you want; this includes checking your annual income and other outgoing income sources you may have

Our first-time buyers commonly ask questions about how much they can borrow for their mortgage. Our website does consist of a calculator available, but it doesn’t give you the exact figure. It is always an estimated value. By contacting our mortgage advisors and explaining your situation to them, you can get an accurate value of the maximum loan you can borrow. 

Secondly, they will access your credit history/credit score to see if you can handle the financial responsibilities of purchasing a property. All these factors will, in the end, determine how much you can borrow for your mortgage. How much amount of deposit you can put down will also determine which mortgage deals you can access. 

Here at Care Financial Services, we have honest and hardworking mortgage advisors who possess the knowledge of a variety of lenders and mortgage deals available. This knowledge helps us look into your income, credit history, and expenditure and allows us to provide you with thousands of suitable deals. 

We understand the importance of being up to date with the fast pace of the property world. Our expert mortgage advisors at Care Financial Services are always up to date with all the government schemes. They try to get you the best systems that suit your situation so that they can answer any queries you may have regarding government schemes. Many government schemes help first-time buyers get on the property ladder. Some of these are listed below:

Help-to-buy – equity loan: This scheme was launched to aid first-time mortgage buyers. You should be over eighteen years old to qualify for this scheme,, the property at hand must be sold to you by a ‘help-go-buy’ registered builder, and it must solely be the only home you live in. This scheme is valid till March 2023. See Help-To-Buy

Shared ownership scheme: This allows buyers to purchase a percentage of the property while paying rent on the remaining portion. The buying share can range from 25% to 75% of the property value; however, some sellers may allow you to buy the property at just 10%. To be eligible for the shared ownership scheme, you will have to prove that you cannot afford to pay the entire deposit and mortgage payments, and your annual income must also be less than £80,000. 

The mortgage guarantee scheme: Due to the pandemic, there was a considerable demand increase in the property market, as many people wanted to purchase their own homes. In April 2021, the UK government instructed lenders all over the county to reintroduce mortgages on less than 10% deposits, giving buyers a better chance to get on the property wagon. This scheme encourages potential buyers to secure mortgages on a 5% deposit. This scheme is open till 31st December 2022. 

Lifetime ISA:  You can open a Lifetime ISA (Individual Saving Accounts) if you are aged between 18 to 39. These accounts offer a government bonus of £1 for every £4 you save, which can be put towards buying your first home or retirement. If you save a maximum of £4,000 a year, you will get a bonus of £1,000 ( 25% on the contribution made during the tax year), giving you a total of £5,000. This bonus is paid back to the Lifetime ISA every month.

An AIP is usually obtainable within 24 hours of your initial appointment.  We will advise you to have an AIP before making the offer this will show your lender that you are serious about buying and in a good position to proceed. 

We come across many applicants who have been rejected for a mortgage by their banks; this is where we can help. Some other factors may also lead to your bank declining your application. We at Care Financial Services can look into the situation and recommend the right lender and route to take to get the keys to your new home. 

As a mortgage advisor, Care Financial Services work with an extensive range of lenders with thousands of deals to find you the right solution that suits your situation the best. On the other hand, if you were to approach a bank, they would limit your choices to just their lenders and not any outside lenders. We have also come across some clients that have previously approached a bank first and have been declined due to strict criteria by their lenders. On the other hand, we provide our clients with lenders who offer specialist products with different standards so that we can meet the needs of each customer individually.