Home represents the place that provides us with a centring, the place where we feel secure and in control. For people looking for apartments for rent in San Antonio or buying their first home, the process could seem overwhelming. First, there is the money problem, but fortunately, there are solutions such as first time buyer mortgages. In a nutshell, such a mortgage gives allows you to access a loan for buying your first real estate.
This loan is secured against the purchased property, which means if you do not pay the monthly sum including interest over the agreed period, the value of the house is used to cover the loan. A mortgage broker helps intermediate the process between you and the mortgage lender, who is usually a bank. The broker also informs you in aspects such as the amount of money you can lend, the purpose of a deposit, what documents are needed, and many more.
Who Is the First Time Buyer Mortgage for?
This service addresses people who have never owned a home in the past. The rules for first time buyer mortgages only apply to the main residence. So, if you own other properties that are not used for living, such as a store, and are looking to buy your first home, you are still classified for this mortgage. In other terms, the first time buyer mortgage is not aimed at homeowners and buy-to-let investors, but at those wanting to become a homeowner.
There is also the option of buying a property jointly, with a partner or family member. So even if you are not classified as a first time buyer, you can still access a mortgage with the help of an eligible partner. The applicants for a first time mortgage are checked at the land registry to see if they own residential property. If they are eligible for this program, they can only access it once. Otherwise, there are other types of mortgages for people who aren’t eligible for a first time buyer mortgage.
What Are the Requirements for Buying Your First Home?
There are some steps to follow when looking to take out a mortgage to finance the purchase of a first home. First, if you are serious about this, you will need an appropriate deposit. This deposit represents the cash that you can pay upfront when buying a house, and its size influences the size of the mortgage. Therefore, a larger deposit means less money is needed for paying the property, so the monthly mortgage repayments could be lower. After saving for a deposit, the next step is finding a mortgage broker.
The amount of money you can borrow is determined by many criteria, including:
- the value of the property you wish to buy;
- the size of your deposit;
- the monthly budget you have for repayments;
- the duration of the mortgage;
- and many other factors decided by the lender.
When purchasing a property, you will have to deal with a list of legal proceedings. A conveyancing solicitor will not only handle every legal aspect of this process but also offer you additional support.
Bank Mortgages vs. Mortgage Broker Services
Banks are the old-fashioned option for people wanting to access a mortgage product. A visit to the bank used to be a popular solution, as it would offer their standard mortgage rates depending on your finances. With the appearance of mortgage brokers, banks are starting to lose popularity in the field of money lenders. These days, one can get overwhelmed by the variety of available deals. It is of the utmost importance to find the cheapest deal in the shortest time for you, and this is where a good mortgage broker firm comes in.
A broker will assist you in the entire purchasing process, offering valuable assistance. The broker will then conduct the research for finding the best mortgage lender for you. After the completion of the necessary documents, you will become a proud homeowner. Additionally, broker services will also help you with future inquiries, whether you want to remortgage or just need some information.
What Is a Deposit Used For?
The mortgage deposit is your monetary contribution towards the purchase of your home. Currently, the minimum required deposit is 5% of the total sum. However, a larger deposit is recommended, as it allows you access to better first time buyer mortgage rates. That is because a greater deposit means less risk for your lender.
The size of the deposit also influences the loan to value ratio (also known as LTV ratio) on your property. So, while a 5% deposit will do, you should aim as high as possible to save money in the long run. The source of the deposit can either be personal income or money received from other sources, such as a family gift. However, if you are struggling to build a deposit with your savings, note that there are some government schemes aimed to help you become a first time homeowner.
You should talk with a mortgage broker to estimate the maximum sum you can borrow as a mortgage. Knowing your budget can be helpful when searching for homes for sale. The value of the property you wish to become your home is influenced by:
- the area where it’s located, whether it’s a city or rural home;
- the number of bedrooms and bathrooms;
- the distance to stores, schools, hospitals
- the existence of a garden or a parking lot;
- and other aspects you have to consider when searching for the perfect home; usually, an estate agent will make this job easier for you.
Schemes Aimed to Help Buyers
To help more individuals get their first property, the government has introduced a series of schemes. There are two main helping schemes that you should know about if you want a first time buyer mortgage.
Help to Buy Equity Loan Scheme
The Help to Buy Equity Loan Scheme is for first time buyers and consists of a loan of up to 20% of the value of the newly-bought property. This scheme is addressed to those buyers who saved a deposit of at least 5% of the property value. For an initial period of five years, there will be no interest perceived. After these first years, however, an annual fee of 1.75% is perceived, which will increase early with the inflation rate. You can learn more details about the Help to Buy: Equity Loan from your mortgage broker.
The Right to Buy Scheme
The Right to Buy scheme is a policy in the UK which allows council tenants and housing associations the right to buy their council homes. The Right to Buy scheme allows tenants to buy the house they live in, usually at a discounted price. People who are secure tenants or had a council or housing association as a landlord can apply to this scheme. Even if you are not eligible for this scheme, it is crucial to study all the available government schemes before accessing a mortgage, as it can be a great aid. A specialist mortgage broker will always inform you about the available schemes for you.
