First time buyers help

Buying your first home is exciting. You may be tired of renting or fed up because you are still living at home years after leaving university. Either way you want a place to call your own or need first time buyers help, which you can decorate to your taste, and come.

Repayment mortgages

Unless you have inherited a large cash sum, you will need a mortgage. This is a loan offered by a bank or building society for anything from 25 to 40 years (the term), depending on your age and how much you are borrowing (the bigger the loan, the longer you will need to pay it back so that the payments remain affordable). You are charged a monthly amount of interest; most mortgages are repayment (capital and interest), so as well as paying interest every month, you also pay a bit of the capital. By the end of the mortgage term, you should have paid it all back and the property is yours.

The deposit

In most cases, you will need a deposit. This is a proportion of the purchase price that you either save up or are given by your parents or grandparents. Most lenders want to see at least a 5 per cent deposit to 10 per cent, to show your commitment. If you have a bigger deposit of 15 per cent, or preferably 25 per cent, mortgage rates are cheaper. However, most first-time buyers don’t tend to have that big a deposit. Particularly, if they are buying in London or the south-east, where property prices are high.

Parental help

If you haven’t got a deposit, or much of one, your parents may be able to help. In an ideal world, they would be able to give you the deposit .Instead a loan, as the lender will factor in the repayments when deciding how big a mortgage you can afford). If parents can’t afford to hand over cash, they may be able to offset their savings against your mortgage. This can be done via schemes such as the Barclays Family Springboard or Lloyds’ Lend a Hand. These enable you to buy without a deposit as long as parents lodge 10 per cent of the purchase price in savings for five years.

Joint borrower sole proprietor

With more parents helping their offspring onto the housing ladder, the joint borrower sole proprietor (JBSP) mortgage has become popular. This is a way of structuring the purchase. So that the parents’ income is taken into account along with the child’s when the lender decides how much they can borrow. But the parents do not go on the property deeds. There is no stamp duty surcharge to pay (usually charged at 3 % if the purchaser already owns a property).

Fixed or variable?

There are two types of mortgage – fixed or variable. The first means the rate of interest is set for a period of time and therefore tends to be popular with first-time buyers as it helps with budgeting. However, if you could still afford to pay your mortgage if rates rises, then a variable rate might be considered.

Seek advice

When you are buying your first home, the process can seem confusing. This is where SWG Mortgages can help – we are a whole-of-market broker which means we have access to all the deals available. We can guide you through the mortgage process from start to finish. SWG Mortgages make ensure you get the right mortgage for your circumstances at the right price.