There are few people who can afford to buy a house outright so in order to pay for a home a mortgage needs to be arranged. A mortgage or home loan means the long term borrowing needed to acquire a property. You can choose how long a period the loan will be in force but the usual term is between twenty and twenty five years. The length of the loan and the amount of payments due each month can be adjusted to fit as closely as possible with your earnings taking into account the amount you are prepared to put down as a deposit. Quite simply the figures have to add up.
Securing a mortgage nowadays is no longer as easy or straightforward as it one was and this in itself can be a daunting factor for those wanting to purchase their first home. A home will be the most expensive thing you will ever buy so getting the right home loan is as important as finding the right property.
Gone are the days when hundred per cent mortgages were commonplace; it is now more likely that the first time buyer will have to find a hefty twenty five per cent of the purchase price as a down payment on a property and also incur huge fees that are added to the loan.
But there is a plus side; property will never be as affordable again so now is the time to buy. If you have a steady income and can get the right advice from an independent financial adviser or mortgage broker then you are half way to becoming a homeowner. An independent adviser is not tied to any particular mortgage company and will be able to find you the best possible deal to suit picked from a vast selection of those currently available.
Mortgage companies need to be as certain as possible that they will get their money back. They don’t like to repossess properties as the cash will be tied up in the house so they can’t lend it to someone else until it is sold. Thus the checks on your income performance and credit score are far more stringent than they were in times past. There used to be a tendency for mortgage companies to be over lenient and over lend to borrowers even lending on up to five times the amount of personal income but things have now changed and they will take every step to ensure that you meet with their current lending criteria.
Don’t be disheartened if you are refused by one particular lender. Keep on trying as what will satisfy one financial institution may not satisfy another.
You must be certain that the monthly repayments are affordable and also be wary of the possibility of interest payment increases over the term of your loan. The key is not to overstretch yourself when it comes to mortgage finance. Buying a house is a step on the ladder but not a step to be taken lightly. You may be eager to become a homeowner but be sensible and realistic with regards to your borrowing limits. Owning a home comes with a whole set of commitments and not just the ones you have pledged to the loan company so all monetary outlay has to be factored in. You don’t want to find yourself with a brand new home but with no money left to put bread on the table. Your income and expenditure need to balance or you will soon be in trouble and not be able to meet your monthly payments.
With the help of the internet there are plenty of online calculators which will give you an idea of what your monthly repayments are likely to be; these can be invaluable tools that you can use at your own leisure before contacting a mortgage adviser so you can gauge exactly what your financial commitments will be. Never rely on rough estimates when it comes to property.
Don’t waste your time looking at properties that are outside of your price range unless you have wealthy parents who are willing to help out financially. The ‘Bank of Mum and Dad’ can make a vast difference in providing some of the deposit but you can’t expect your parents to subsidise you on a permanent basis if you find you have taken on too much. Don’t forget larger properties may mean more space but they also mean bigger bills.
First time buyers can benefit from builders incentives and other various schemes that will help considerably with keeping costs to a minimum.
There are many types of mortgages from fixed rates to trackers, interest only or capital repayment and new deals are being offered nearly every day in the highly competitive market that is mortgage lending but the thing to decide is which one offers the flexibility you need for your own individual circumstances. Each type of mortgage has its own advantages and drawbacks so getting the right one is important so you don’t make mortgage mistakes which will be costly to rectify.
If you are a first time mortgage applicant do your homework first to find and compare the best offers available; here are some links to get you started:
http://www.moneysupermarket.com/mortgages/?gsl=1&p=0&ef_id=oEdPjIw3SwgAAEOs:20120416211639:s for those in the UK
https://www8.bankofamerica.com/home-loans/first-time-buyer/HomeLoanFeatures.go for those in America.