mortgage questions first-time buyers always ask
Buying your first property is a thrilling experience, but one filled with questions. As mortgage brokers, we handle scores of first-time buyers in London and across the UK, and the overwhelming majority of them have very similar kinds of questions. The below are the top seven mortgage questions that first-time buyers always ask, and the answers you need to make you feel safe on your home-buying journey.
Mortgage Questions First-Time Buyers Always Ask
- How much can I borrow for a mortgage?
How much you can typically borrow depends on:
- Your income (bonus, salary, freelance, or benefits)
- Your spending (debt repayments, children, car financing, etc.)
- The deposit you’ve saved
Most banks will lend you 4 to 4.5 times your salary, but others will lend you more for certain jobs. Your own borrowing capacity can be calculated by an Oportfolio-type mortgage broker and it can also give you lenders who have good criteria.
- How much do I pay as a deposit?
You’ll usually pay 5% of the value of the property as a deposit. But:
- A 10% deposit gets you into better rates
- A 15–20% deposit will lower your monthly payments significantly
- Low-cost products for new-builds would enable lower deposits or shared ownership
Don’t forget in more costly regions of the country like London a 5% deposit is still an awful amount of money, so get saving early and look to receive assistance from the government.
- What are the various forms of mortgage?
The most common are:
Fixed-rate mortgages: Your interest rate will stay the same for a period (e.g. 2, 3 or 5 years)
Tracker mortgages: Follow the Bank of England base rate, so that payments rise and fall
Variable rate mortgages: Are linked to a lender’s variable rate, which can be altered at any time
The majority of first-time buyers go for fixed-rate deals due to their stability.
- What else should I plan for in my budget?
In addition to your deposit, you’ll need to factor in:
In addition to your deposit, you will also need to factor in:
- Stamp Duty (but first-time buyers are excluded on properties up to £425,000)
- Conveyancing fees
- Valuation/survey charges
- Arrangement fees for the mortgage
- Moving costs and initial furniture
A broker can offer you an open cost plan and leave you with no surprises.
- Why do I need a mortgage broker, and do I have to hire one?
A mortgage broker will shop around for you to give you the best quote. Here at Oportfolio, we:
Have access to special offers not available to borrowers directly
Understand what lenders require and how to make your application in the best way possible
Take you through the forms and speak to solicitors, agents, and lenders
First-time buyers typically benefit greatly from professional advice through this complex process.
- What is an Agreement in Principle (AIP)?
An AIP (also called a Decision in Principle) is a written indication by a lender of how much they might be willing to lend you, based on initial information.
It’s not a guarantee, but it shows sellers and estate agents that you’re a serious buyer. You’ll usually need one before making an offer on a property.
- How long does the mortgage process take?
The whole process typically takes 4 to 8 weeks, though this depends on a variety of factors:
- Whether your documentation is in order
- The lender’s processing and how complex it is
- How well your solicitor and the solicitor of the seller advance the sale
Start off with pre-approval and get an active broker to guide you, thereby enabling you to move faster without encountering delays.
Ready To Move Forward?
Acquiring your first home is a big milestone, but with accurate information and professional guidance, it should not be intimidating. At Oportfolio, we are committed to making first-time buyers’ mortgage process as seamless as possible so that you can focus on finding your dream home. Call our team today.
