First Time Buyers

Buying your first home is something you are unlikely to forget and it can be both exciting and daunting all at the same time. You will only ever be a first-time buyer once in your life and the decisions you make now will decide a lot when it comes to your medium and long-term future. At Huxley Mortgage Services we aim to take away the stress to allow you to enjoy this special milestone in your life.

Getting A Good Mortgage Deal

When you are caught up in all the excitement of choosing your first home, it is easy not to pay too much attention to the mortgage deal you might be getting.

Getting the right mortgage deal is critical to your financial future, therefore it is important to pay close attention to the interest rate you will be paying on your mortgage loan and the monthly payments.

Banks & Building Societies

If you opt to look for a mortgage on the high street, you will find there are hundreds of banks and building societies with thousands of mortgage products available. From fixed rates to tracking rates and discounted rates, it can be hard to get your head around it all.

Banks and building societies will only tend to offer you what is convenient and sadly sometimes they may not offer you enough money to buy your dream property or refuse applications altogether.

How A Mortgage Broker Can Help

Fortunately, by using an independent whole of market mortgage broker, if there is a first-time buyer mortgage product available for you, we’ll find it. Our qualified advisors will not only help you make sure you are looking in a realistic price range but also find out if the monthly payments will be affordable for you.

At Huxley Mortgages we will be your guide to getting the best mortgage deal available. Call one of our advisors today for more information.

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What Is a First-Time Buyer?

A first-time buyer is someone who is purchasing a house for the very first time and doesn’t already own (or hasn’t previously owned) property before. Couples qualify as first-time buyers, so long as neither person owns (or has owned) a house in the past.

If you’re buying your first house and own (or have owned) commercial property such as a shop, bar or restaurant, you still qualify as a first-time buyer, provided that the commercial property has never had living quarters attached to it. The realm of first-time buyers refers only to residential properties.

Who isn’t a first-time buyer? If you’re buying your first house but you’ve inherited a house or someone has bought a house for you, you don’t qualify as a first-time buyer, even if you’ve never technically bought a house before. You also lose first-time buyer eligibility if you’re planning to rent out the house you’re buying (what’s known as buy-to-let).

Getting a mortgage (particularly your first mortgage) is a huge financial decision that requires careful thought, research and number-crunching. It’ll have a huge impact on your financial future, which is why it’s important to seek expert advice before making a decision. Huxley Mortgage Services are Cheshire mortgage brokers who can guide you through the entire process and find the first-time buyers mortgage that’s right for you.

first time buyer

How to Get a Mortgage as a First-Time Buyer

Getting a mortgage for the first time can be a complicated and daunting process. In order to get approved for a mortgage, you’ll be assessed by a lender and you’ll need to convince them that you’re able to repay your mortgage. You can use our mortgage calculators to see how much money you’ll be able to borrow and how much your monthly repayments will be.

Here’s what you need in order to be approved for a mortgage as a first-time buyer:

  • Deposit — This is a lump sum that you put towards the purchase of your house, typically 10% of the value. Some lenders accept as little as 5%, although you could face a Higher Lending Charge. The bigger your deposit, the better mortgage deals and interest rates you’ll be offered. This is because your loan-to-value ratio (the size of your mortgage versus the value of your house, expressed as a percentage) will be improved and you’ll be seen as lower-risk to lenders.
  • Financial Information — You’ll need to provide your lender with certain financial documentation in order to convince them that you’re able to keep up with your repayments. Lenders usually ask for three years’ worth of payslips, recent bank statements (to review your income and outgoings), your credit history. You’ll also need to provide proof of identity and details of the house you’re looking to buy.

What Mortgage Options are Available to First-Time Buyers?

As a first-time buyer, there are a wide range of mortgage options available to you. Which mortgage you choose depends on how much you’re borrowing, your preference of paying the interest and your attitude towards risk.

First, you need to decide how you want to pay the interest on your mortgage. You can pay this in four different ways:

  • Repayment mortgages — Where you pay off the interest plus the capital each month. The most popular and widely available type of mortgage. This allows you to gradually reduce your debt until you reach the end of your mortgage term (typically 25 years) or you pay it off in full.
  • Interest-only mortgages — Where you only pay the interest each month. Instead, You pay back the full amount in one go at the end of your mortgage term. Because you’re not paying back any capital, your monthly payments will be lower. However, it obviously carries a higher risk and requires you to be financially responsible while providing evidence to your lender that you’ll be able to meet the large repayment.
  • Offset mortgage — Where your mortgage is combined with your savings and current account. You only pay the interest on the difference between how much money you’re borrowing and how much money you currently have. An offset mortgage is more complex than other mortgages. There are tax benefits, but if you dip into your savings, your interest payments will go up. Because your savings are offset against your mortgage, they won’t earn their own interest.
  • Combined mortgage — Also known as a part and part mortgage, this is where your mortgage is split between a repayment mortgage and interest-only mortgage. Part of it is paid off through capital repayment while the rest is an interest-only plan. A combined mortgage is a useful option if you want lower monthly repayments and expect to have a large amount of savings, investments or inheritance to pay off the remaining amount at the end of your term.

Once you’ve decided how you want to repay your mortgage, you then need to think about what type of interest rate best suits you. You can choose between a fixed rate that stays the same for a set period of time, or a variable rate that fluctuates, meaning you might pay less interest one month, but you may end up paying more interest another.

There are a wide range of mortgages to choose from, including:

  • Fixed rate – Where you pay the same amount each month, giving you stability, security and peace of mind when it comes to budgeting. Most fixed rate mortgages come with an introductory period where you get a better interest rate for a certain length of time — usually between 2 and 5 years. However, once this period expires, you will be placed onto your lender’s standard variable rate, which usually carries higher interest rates that fluctuate from month to month. This is when it’s a good time to remortgage.
  • Variable rate — Where the amount of interest you pay varies from month to month, depending on the Bank of England’s base rate. They’re more of a gamble: if interest rates fall one month, you’ll end up paying less. But if interest rates rise another month, you’ll end up paying more. Types of variable rate mortgages include a discounted rate, where the interest rate is slightly below your lender’s standard variable rate; a tracker mortgage, where the interest rate is a small percentage above or below the Bank of England’s rate; and a capped rate mortgage, which follows your lender’s standard variable rate but has a cap on how high it goes.

What are the Benefits of Being a First-Time Buyer?

As a first-time buyer seeking a mortgage, you get access to certain benefits that other borrowers don’t. This mainly involves help from Government schemes and policies, including:

  • Lifetime ISA — A Lifetime ISA (LISA) rewards you for saving to buy a house. The Government will boost your savings by 25%. You can put in up to £4,000 a year and receive a maximum of £1,000 per year in help. Lifetime ISAs are available to those between the ages of 18 and 40 who are looking to buy a house under £450,000. The Government previously offered a Help to Buy ISA, but these were discontinued on November 31, 2019.
  • Help-to-Buy Equity Loan — A Help to Buy Equity Loan is where the Government lends you up to 20% of the value of your house. The loan is interest-free for the first five years. Useful option for those with a 5% deposit, as it means you’ll only need a mortgage worth 75% of the value of your house, as the Government will cover the remaining 20%.
  • Shared Ownership — Shared ownership is available to first-time buyers whose household income is less than £80,000 a year. You take out a mortgage to purchase a portion of your home (between 25% and 75%) and you pay rent to the Government or a housing association on the remaining value. You might be able to buy a larger share of your house when you can afford to.
  • Stamp Duty Relief — Stamp Duty is the tax you pay when you buy a property over a certain price in the UK. The higher the value of your house, the more tax you have to pay. For existing homeowners who are buying a new house, the Stamp Duty tax rate currently looks like this:

+ 0% tax on the first £125,000.

+ 2% tax on the portion from £125,001 to £250,000.

+ 5% tax on the portion from £250,001 to £925,000.

+ 10% tax on the portion from £925,001 to £1.5 million.

+ 12% tax on the portion above £1.5 million.

first time buyer mortgage

Stamp Duty Relief offers discounts and more flexible tax bands for first-time buyers. For first-time buyers, the Stamp Duty tax rate looks like this:

+ 0% tax on the first £300,000 of your house.

+ 5% tax on the remainder up to £500,000 (the portion from £300,001 to £500,000).

If your house is worth more than £500,000, you won’t be eligible for Stamp Duty relief and will pay the standard tax.

How We Can Help First-Time Buyers Get a Mortgage

Making your first step onto the property ladder can be a daunting and confusing process. You’re only a first-time buyer once in your life and the decision you make will play a huge impact on your financial future, so it’s important that you make an informed decision. That’s where Huxley Mortgage Services come in.

We’re a mortgage brokers in Cheshire with a team of experienced, friendly and knowledgeable advisors who are here to help you find the right mortgage for you. We’ll sit down and discuss your situation to find the best first-time buyer mortgage based on your circumstances.

Huxley is an independent, whole of market brokers with access to over 140 lenders, meaning we have a wide range of options to choose from. Thanks to our strong connections, we can offer you exclusive mortgage deals you won’t get by going straight to lenders.

At Huxley, we pride ourselves on our excellent customer service. We’ll explain everything in an easy-to-understand fashion while guiding you through the process of securing your first-time buyer mortgage. Our red carpet service will make a potentially stressful time for you as a first-time buyer as smooth as possible.

If you’re looking for a first-time buyer mortgage in Chester, get in touch with Huxley Mortgage Services today.