Buying a home is a major financial decision, and it's essential to ensure you get the best mortgage advice and find the best deal for your needs. Knowing where to start when applying for a mortgage can be daunting for a first-time buyer, but with the proper guidance, you can make the process easier and more manageable. This blog will look at what goes into applying for a mortgage, the difference between fixed and variable-rate mortgages, top tips for first-time buyers, and any help schemes available.
A mortgage is a loan from a lender that allows you to purchase a property, and choosing the right mortgage is one of the most important decisions when buying a home. It is secured against the property's value and must be repaid over an agreed period. The amount of money you can borrow is determined by factors such as your income, credit score and financial history. Therefore, it is essential to find the best mortgage advice to make an informed decision that is right for you.
What Goes Into Applying For a Mortgage?
The mortgage application process can take several weeks or months, depending on the lender and your circumstances. Generally speaking, you must provide documents such as bank statements, proof of income and tax returns to apply for a mortgage. The lender will also consider factors such as your credit score, debt-to-income ratio and any assets you may have.
When choosing a mortgage, there are two main types – fixed rate and adjustable rate (ARM). A fixed-rate mortgage has an interest rate that remains constant throughout the life of the loan. An adjustable-rate mortgage (ARM) has an interest rate that changes according to market conditions.
Should I Choose a Fixed Rate or Variable?
Choosing between a fixed rate or variable rate mortgage depends on your individual circumstances and preferences. A fixed-rate mortgage can provide peace of mind as you know exactly how much you will pay monthly, whereas an ARM can offer more flexibility. Generally speaking, if you plan on staying in your home for longer than 5 years, then a fixed rate may be more suitable, whereas if you plan on moving within 5 years, then an adjustable rate may be a better option.
Top Tips For First-Time Buyers
When applying for a mortgage as a first-time buyer, there are certain steps you can take to ensure you get the best deal. Firstly, checking your credit score and taking steps to improve it, if necessary, is important. It can also be helpful to save up for a down payment to reduce the amount you need to borrow.
It is also important to seek advice from an experienced and respected independent Mortgage Broker who will compare different lenders to find the best deal for your needs and who can provide tailored advice on the best mortgage for you.
Are There Any Help Schemes Available?
For first-time buyers, numerous help schemes are available to make purchasing a property more accessible. These include government grants such as the Help To Buy ISA for first-time buyers saving to buy a house up to the value of £250,000 outside London or £450,000 inside London. You can save up to £200 a month, and you will receive a 25% bonus from the Government towards your first home, up to £3,000. The bonus will be the same as 25% of your closing balance if it is £1,600 or more.
In addition, there are schemes in Scotland, such as the Scottish Government's Low-cost Initiative for First Time Buyers (LIFT), a shared equity scheme that has helped over 12,000 people buy a home. You can find out more here, or Shared Ownership schemes that allow certain people to buy a home without funding its entire cost. The scheme is open to first-time buyers (FTBs), people aged 60 and over, social renters, disabled people, members of the armed forces, veterans who have left the armed forces within the past two years, and widows, widowers and other partners of service personnel for up to two years after their partner lost their life while serving.
When choosing a help scheme, it is essential to consider the type of home you are looking for and how much deposit you have saved. There may also be other criteria, such as income limits or restrictions on where you can live, that need to be considered when applying for help schemes. Any good mortgage adviser can help you navigate the criteria required.
Buying your first home can be an exciting but daunting experience, so it's essential to make sure you get the best mortgage advice before making any decisions. There are numerous mortgage options, so it's vital to understand the difference between fixed and variable rates and get independent advice on the best deal for your needs. Additionally, help schemes are available for first-time buyers, which can make purchasing a property more accessible. With the proper guidance, finding the best mortgage advice can be manageable - so feel free to speak to one of our friendly and experienced Greenshoots Financial team.
How do I find out more?
Contact our friendly brokers, who will discuss your situation and discuss the right options for you.
Call: 01506 537111
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