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Mortgages for
first time buyers

At Protection and Investment, we very much
believe that if you fail to plan, you plan to fail.

For first time buyers

Navigating mortgages can be a complex task, but we’re here to simplify it for you. Our services are tailored to provide you with the knowledge and support you need to make informed decisions about your home purchase. Whether you’re just beginning to explore your options or have specific questions, we offer a reliable source of information and guidance. We’d love to help you embark on your journey to homeownership, with clarity and confidence.

Types of mortgages for
first time buyers

Fixed Rate Mortages

A fixed-rate mortgage is a popular choice, typically securing your interest rate for two, three, or five years to provide payment stability. However, this security comes with trade-offs: you won’t benefit from interest rate drops, and the initial rate is often higher than variable options. Moreover, switching before the fixed term’s end can result in substantial penalties. When deciding, consider your long-term plans and financial flexibility carefully.

Interest-only Mortgages

An interest-only mortgage means your monthly payment covers only the loan’s interest, resulting in lower monthly expenses. However, it’s vital to have a plan in place to repay the original loan amount at the end of the term, as failing to do so might require selling your property. It’s important to note that, since the loan balance remains constant, interest-only mortgages ultimately cost more than repayment mortgages, where you gradually pay off both interest and principal over time.

Joint Mortgages

A joint mortgage is a home loan taken out by two or more individuals, typically spouses, partners, or family members, to purchase a property together. The primary advantage of a joint mortgage is that it allows multiple borrowers to combine their financial resources, making it easier to qualify for a larger loan or afford a more expensive property. Additionally, joint mortgages often come with shared responsibility for the loan, including both the financial benefits and obligations. This can promote shared homeownership and potentially reduce individual financial burdens.

Offset Mortgages

When you have both a mortgage and savings account with the same lender, you can use your cash savings to offset the interest charged on your mortgage. Instead of placing your savings in a separate account with another institution, consider utilising an offset account. This strategy ensures you won’t pay any interest on the mortgage amount equivalent to your savings balance, potentially saving you money.

Standard Variable Rate

A standard variable rate (SVR) mortgage is a flexible home loan where the interest rate can change, typically based on the lender’s base rate or market conditions. The key benefit is flexibility, allowing borrowers to enjoy lower monthly payments when interest rates are low. SVR mortgages often have fewer restrictions and early repayment penalties, providing more financial freedom. However, borrowers should be aware that the interest rate can rise if market conditions change, leading to higher monthly payments.

Tracker Mortgages

A tracker mortgage is a variable rate mortgage linked to the Bank of England base rate, making it an attractive option, especially in times of low interest rates. Younger borrowers, particularly those aged 18-24, are often more inclined to choose the potential for fluctuating interest rates in their mortgage payments, with twice the likelihood compared to other age groups

Take control with a FREE initial meeting

There are many more types of mortgages. If you have any questions and would like to learn more about the types of mortgages available to you, contact us today for a free initial meeting.

Increasing your chances

There are many different ways in which you can increase your chances of being accepted for your first mortgage. Lenders need to see stability, that you’ll be able to pay your mortgage off every month and for the forseeable future. Here are a few ways you can increase your chances. You can also check out our article about the common mistakes people make when applying for a mortgage.

Guarantor Mortgage

A guarantor mortgage allows individuals with limited or poor credit history. This can be a great option for first-time buyers to secure a mortgage with the backing of a guarantor, often a family member or close friend. There are some advantages and disadvantages for mortgages with a guarantor.

Pros:

  1. Increased Approval Odds: Guarantor mortgages can help those who might struggle to qualify for a mortgage on their own due to insufficient credit or income.
  2. Lower Interest Rates: Some lenders offer more favorable interest rates with a guarantor mortgage compared to other forms of adverse credit lending, making it more affordable.
  3. Smaller Deposit: Borrowers can access mortgages with smaller down payments, as low as 5% or even less, making homeownership more achievable.

Cons:

  1. Guarantor Liability: Guarantors are legally responsible for the mortgage if the borrower defaults, which can strain relationships and put the guarantor’s own assets at risk.
  2. Financial Risk: Guarantors must have a strong credit history and be financially secure, as their finances could be impacted if they have to cover the mortgage payments.
  3. Limited Independence: Borrowers may have to rely on their guarantor’s financial support until they can establish their own creditworthiness, potentially reducing financial independence.

Buying your first home?
We' love to help!

Buying your first home is an exciting, and daunting, adventure. At Protection and Investment, we’re expert Mortgage brokers and advisors, who pride ourselves in helping first time buyers get onto the property ladder. We’d love to help you secure your first home. Book a free initial meeting with us today.