An Ultimate Guide For First Time Home Buyers 

Buying a property is one of the biggest decisions you’ll ever make in your life, and it’s easy to feel overwhelmed by the process. That’s why we’ve put together this first time buyer guide to help you navigate solicitors, mortgage advisors and what certain terms mean. We’ve broken down everything you need to know about buying a property from beginning to end, and we’ve also answered some of the most common questions you’ll have. 

How first time buyer mortgages work? 

A mortgage is a type of loan designed specifically for the purchase of land or property. Typically, you will put down a deposit and borrow the remaining amount from a lender. The term of a mortgage is typically 25 years, although this can vary. You will repay the loan on a monthly basis until it is fully repaid. Before a mortgage is approved, the lender will conduct an assessment of your circumstances; they will look at factors such as your income, expenses and credit score to determine if you are financially stable enough to take out such a large loan.

There are also other factors to take into account depending on which mortgage you select. For instance, if you choose first time buyer mortgages, the government will provide an equity loan, and you will put down your deposit. This means you will have to borrow less money from your lender, meaning you will have a wider choice of mortgage rates. This will vary greatly depending on whether or not you take part in any first time buyers initiatives, and which mortgage / lender you choose. 

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What does loan value mean?

It’s the proportion of your home you’re borrowing against. For instance, if you had a mortgage of £100k and you paid a 5% down payment of £5k, you’d have 95% of your loan to value. It’s also known as a 95% mortgage.

Can first time buyers get mortgage?

Yes, they do. There are many different types of mortgages available, and many of them are 95% mortgages. 95% mortgages are ideal for first-time homebuyers because they require the lowest possible down payment. The lower your down payment, the more restrictions on the type of mortgage you can take advantage of. 

How much is the deposit for first time buyers?

For first time buyers, the minimum deposit amount is 5% of your property’s value. For example, a property valued at £180,000 would require a 5% deposit, meaning a £9,000 deposit would be required. Many first time buyers, however, save for a little longer in order to build up their deposit, secure a better interest rate and increase the number of mortgages they can take out. UK finance data (December 2019) shows that the average first time buyers loan size is £174,275. With a loan to value of 77%, this equates to a £40,020 deposit. 

Do first time buyers pay stamp duty?

This will depend on the cost of your property. For example, if your property is worth less than £300000, you will not pay any stamp duty. If your property is worth £300,000 to £500,000, you will pay stamp duty on the value of the property. If your property costs £500,000 or more, you will pay full stamp duty.

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Don’t want to go through a tough ordeal all by yourself to buy your dream house? Local estate agents at Dowen.co.uk can help you out. It’s only a click away.