First Time Buyer Mortgages at Goodnews Mortgages

First time buyer mortgages are specifically designed for those purchasing first home. These mortgages often come with features and benefits tailored to support new homeowners, such as lower deposit requirements, flexible lending criteria, and incentives like cashback or reduced fees. However, as a first-time buyer, finding the right mortgage can be challenging due to the sheer variety of options available and the specific criteria set by lenders.

Why Choose First Time Buyer Mortgages?

Being a first-time buyer has its advantages. Many lenders offer competitive deals to attract new buyers to the market. Some key benefits of first time buyer mortgages include:

1. Lower Deposit Requirements: Many first time buyer mortgages are available with a smaller deposit—often as low as 5%—making it easier to get onto the property ladder.
2. Special Incentives: Some mortgages offer special incentives, such as cashback, low interest rates, or help with legal fees.
3. Government Schemes: First-time buyers can often access various government schemes, such as Help to Buy, Shared Ownership, or Lifetime ISAs, to support their purchase.

How Much Deposit Do First-Time Buyers Need?

The size of the deposit required for a first time buyer mortgages typically range from 5% to 20% of the property’s value. For example, if you’re looking to buy a £200,000 property, you’d need a minimum deposit of £10,000 for a 5% mortgage. While a lower deposit makes it easier to start, having a larger deposit (e.g., 10-20%) can unlock better mortgage deals with lower interest rates.

Deposit Breakdown:

• 5% Deposit: For those looking to get onto the property ladder quickly. Typically results in higher interest rates.
• 10% Deposit: Provides a better range of mortgage products and lower rates.
• 15% Deposit and Above: Offers access to more competitive rates and could save thousands in interest over the mortgage term.

Types of First Time Buyer Mortgages

There are several mortgage options available for first-time buyers, each catering to different financial situations and goals. Here’s a closer look at the main types of first-time buyer mortgages you can consider:

1. Fixed-Rate Mortgages

With a fixed-rate mortgage, the interest rate is set for a specified period, usually between 2 to 5 years. This means your monthly payments remain the same, offering stability and making it easier to budget.

Ideal for: Buyers who want stability and predictable payments in the early years of homeownership.

Considerations: After the fixed term ends, the rate usually reverts to the lender’s standard variable rate (SVR), which could be higher.

2. Tracker Mortgages

Tracker mortgages are linked to the Bank of England’s base rate. If the base rate changes, your mortgage rate will adjust accordingly. This type of mortgage can offer lower initial rates compared to fixed-rate deals but comes with the risk of rising payments if interest rates increase.

Ideal for: Buyers willing to accept some variability in payments in exchange for potentially lower rates.

Considerations: Payments can fluctuate, making it harder to plan your budget.

3. Discounted Variable Rate Mortgages

A discounted variable rate mortgage offers a discount on the lender’s SVR for a set period. This means your rate and monthly payments can change if the SVR changes. These mortgages can be attractive if the SVR is low, but unpredictable changes can make them riskier.

Ideal for: Buyers looking for lower initial payments and willing to accept some uncertainty.

Considerations: Payments can increase if the lender’s SVR rises.

4. Help to Buy Mortgages

Help to Buy mortgages are designed for buyers using the government’s Help to Buy: Equity Loan scheme. Under this scheme, the government lends up to 20% (40% in London) of the property’s value, meaning you only need a 5% deposit and a 75% mortgage.

Ideal for: Buyers with a small deposit looking to purchase a new-build home.

Considerations: The government loan is interest-free for the first 5 years, but charges apply after that.

5. Shared Ownership Mortgages

With Shared Ownership, you buy a share of a property (usually between 25% and 75%) and pay rent on the remaining share. You’ll need a mortgage for the share you own, making it a more affordable option for those with limited funds.

Ideal for: Buyers struggling to afford a full mortgage on their own.

Considerations: You’ll have rent and mortgage payments, and selling can be more complex.

Understanding the Costs of a First-Time Buyer Mortgage

When applying for a first-time buyer mortgage, it’s important to consider all the associated costs beyond the monthly payments. Here’s a breakdown of some common expenses:

1. Stamp Duty

First-time buyers purchasing a property under £425,000 (in England and Northern Ireland) are exempt from Stamp Duty. If your property is valued between £425,001 and £625,000, a discounted rate applies.

2. Legal Fees

You’ll need a solicitor or conveyancer to handle the legal side of the property purchase. Expect to pay between £800 and £1,500.

3. Survey Costs

A property survey could be carried to check the property’s condition. Surveys range from a basic valuation (around £250) to a full structural survey (£600+).

4. Home Insurance

Lenders typically require you to have buildings insurance as a minimum. Expect to pay between £100 and £500 annually.

How Goodnews Mortgages Can Assist with First Time Buyers Mortgages

At Goodnews Mortgages, we’re committed to making your journey as a first-time buyer as smooth and stress-free as possible. Here’s how we can assist you:

1. Expert Advice: Our experienced advisors specialize in helping first-time buyers find the right mortgage deal tailored to their needs and financial situation.
2. Access to a Wide Range of Lenders: We have access to a wide panel of lenders, including those offering specialized first-time buyer products.
3. Guidance Through the Process: From your initial enquiry to completion, we’ll guide you through each stage, ensuring you understand the process and make informed decisions.
4. Help with Complex Situations: If you have a complex income structure, are self-employed, or have a low credit score, we can find solutions to fit your circumstances.
5. Personalized Service: At Goodnews Mortgages, we prioritize a customer-centric approach, ensuring you receive personalized service and support throughout your home-buying journey.

Tips for First Time Buyers

Here are some expert tips to help you prepare for your first mortgage:

1. Boost Your Credit Score: Check your credit report and address any issues before applying. A strong credit score can unlock better mortgage deals.
2. Save for a Bigger Deposit: The more you can save, the better your mortgage options will be, with lower rates and higher approval chances.
3. Get a Mortgage Agreement in Principle: A Mortgage Agreement in Principle (AIP) shows sellers you’re serious and gives you an idea of how much you can borrow.
4. Factor in Additional Costs: Remember to budget for costs like surveys, legal fees, and moving expenses.
5. Seek Professional Advice: Working with a broker like Goodnews Mortgages ensures you receive expert guidance and access to the best deals on the market.

Ready to Start Your Homeownership Journey?

Buying your first home is a big step, but with the right advice and support, it can be a rewarding experience. If you’re ready to explore your first time buyer mortgages option, get in touch with Goodnews Mortgages today. Our team of experienced advisors is here to help you find the perfect mortgage solution and guide you through every stage of the process