Frequently asked questions from first time buyers
Being a first time buyer is both exciting and daunting at the same time. It is easy to become confused by all the financial and legal jargon which can often complicate things and make knowing what is best for you a difficult decision. Don't assume that you are the only one who doesn't understand mortgages and buying a home, after all you've never done it before. It is common for first time buyers to ask a large amount of questions to try and gauge a better understanding of how to secure a mortgage and a home. Below are some of the most frequently asked questions by first time buyers.
How much of a deposit do I need to have for a mortgage?
The deposit amount required by mortgage lenders has changed in recent years and will probably continue to change with the recovery of the economy. Currently, there are help to buy schemes for first time buyers that could help you to secure a mortgage with as little as a 5 % deposit. This means that should you want to buy a home that is going to cost £120,000 you would need a minimum deposit of £6,000.
What types of mortgages are there?
There are a range of mortgage options available including;
· Repayment mortgages - A straight repayment mortgage will give you the amount you require as long as you repay an agreed monthly amount with interest over an agreed period of time. Once the mortgage term has ended the mortgage is cleared.
· Interest only mortgages - With an interest only mortgage you will have the amount you require but only be repaying the interest accrued on the loan rather than the capital. This does then leave you with the capital to repay in full at the end of the term but if you have the funds then this can be an ideal option.
· Fixed rate mortgages - A fixed rate mortgage offers you the ability to fix the interest rate you pay on your mortgage, normally for a period of between 2 - 5 years. This can be an ideal mortgage option if you want the security of knowing your interest rate but once the term ends you could be facing a far higher interest rate.
How do I know what type of mortgage is going to suit me?
The best way to establish which mortgage best suits you is to understand what the cost implications may be for each option. Seek the advice of a mortgage specialist as they can help you to understand the options. It is also a good idea to shop around for the best deal. Different mortgage providers will offer different deals and interest rates.
What other costs are involved in buying a home?
The mortgage is not the only cost that you will need to consider when buying your first home. There are other costs involved with buying a home that you need to consider including;
· Mortgage fees
· Solicitors fees
· Stamp duty
· Property Surveys
· Moving costs
You may be able to get some great deal on the added costs but they are unfortunately a hazard that comes with buying a home.