| First
time buyers are especially vulnerable to taking out unsuitable or
expensive mortgages – simply because they haven’t the experience
to know any better. This can lead to years of higher than required
payments or penalties – so if you’re just taking your first steps
onto the property ladder it’s worth looking around and comparing
the many different types of mortgage deals and lenders. It could
save you thousands in the long run.
Remember
that the mortgage industry is highly competitive – so lenders are
fighting each other off with sticks to get your business. It’s a
good position to be in, so you can probably find a very good deal
that’s perfect for you when you shop around a little.
You’ll also find that quite
a few lenders actually target first time buyers – this means
they will offer you a special deal, possibly for the first year
or two of your term if you take your first mortgage out with them.
It’s certainly worth trying to shortlist mortgage deals that have
special offers for first time buyers so you can compare them to
the rest.
Here
are a few things that first time buyers may wish to consider before
taking out their first mortgage:
- Take heed of circumstances. Will
a fixed or variable rate be best for you? Will you suffer if the
rate moves up to the point where you may not be able to cope with
repayments?
- How much do you need to borrow?
What level of deposit can you come up with? 100% mortgages are
available but many times require a mortgage indemnity guarantee
(an insurance policy that lenders will try and force first time
buyers into signing if they have zero or a low deposit).
- Collect as much information about
special first time buyer mortgages to see if you can get a special
rate that may be unavailable to non-first time buyers.
- Remember that if you choose to
leave the mortgage before it’s term runs out you may be subject
to redemption penalties – this can be about 5% of the loan value
when you leave early so read the fine print carefully.
Ultimately, your first home
purchase is a huge step – and getting the best mortgage available
is very important part of the process.
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