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UK Mortgages For The First Time Buyer
By: Michael Sterios
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With the cost of houses and property continuing to rise, UK mortgages are also becoming more expensive. For first-time buyers, this is more of a problem than for those already on the property ladder. With the average cost of a new home now almost £200,000, it's almost becoming an impossibility to get your first mortgage.
Thankfully, there are options available to you, as well as numerous companies who specialise in this particular market. From helping you find the best type of mortgage in the UK for first time buyers to explaining the different interest rates and charges, taking the first step onto the property ladder can be a little more realistic.
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Where to Start
The first thing you need to do is decide how much you can afford, and then take it from there. One of the best features of UK mortgages compared to other countries is that there are a host of different ways specifically to help you buy your first home.
100% Mortgage
For example, you can take out what's known as 100% mortgage. This can make a huge difference in being able to afford your own home if you're a first time buyer. With a 5% deposit on a £200,000 home costing a minimum £10,000, it can allow you to buy a better home than you might have been looking at.
However, you do need to be careful, since 100% mortgages tend to come with a higher interest rate than ones where you pay a deposit. They can also be more difficult to get, due to increased credit checks.
Shared Ownership
Another option is to look at shared ownership - this is where you can buy a home with a friend and share the costs. The benefit of this is that you can both get on the property ladder, although make sure you both sign an agreement for what happens should one of you want to sell their half.
Guarantor Mortgage
This is a particularly useful option for a younger person looking to buy his or her own home. Many banks and lenders will now allow a parent or guardian to "co-sign" the mortgage as a guarantor. This means that if the homeowner can't meet the mortgage payment, the guarantor will meet it instead. Not only does this help satisfy the lender, it may also let the buyer afford a more valuable property. However, these can be risky, since if the guarantor ends up having to pay the mortgage, it could strain whatever relationship they have with the buyer.
Graduate and Professional Mortgages
Another type of mortgage fairly unique to the UK is this one, and it offers an excellent opportunity to anyone who has either just graduated from University, or is employed in a certain profession. Since a University graduate will normally have a large amount of debt, it can be hard for them to get a mortgage. However, lenders are of the opinion that a graduate will be able to find a high-paying job, so they will overlook any debt and allow a graduate mortgage.
A professional mortgage is similar, in that banks are far more likely to give you a mortgage if you have a certain job. Professions such as lawyers or doctors are known to see large initial wage increases, and this helps in getting a mortgage approved.
There are many more UK mortgage methods available for first time buyers, including state help. For all the options available to you, a specialist mortgage advisor will be able to help you find the package that's best for you.
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