Mortgages For First Time Buyers-Home Owner Loans
Introduction To Home Owner Loans
Buying a home has the potential to be one of the most rewarding, yet most stressful experiences of your life. In this hub i will try to explain and simplify the process for finding and obtaining your homeowner loan. There is an astounding amount of mortgages for first time buyers, available on the market today, and you will find it helpful to learn about the different types of home owner loans on offer, before you begin looking for your first property. Mortgages are a secured loans and you could lose your home if you did not make repayments.
Getting That Homeowner Loan
Very few first time buyers can afford a new home without taking on a mortgage. You will need to show that you can meet the repayments and the property you are preparing to buy is suitable. Long gone are the days when you could only get a mortgage from your local bank or building society. Nowadays as well as these traditional mortgage lenders, there are supermarkets and even insurance companies providing home owner loans, making the choice wider and more available. Especially for first time buyers.
Mortgage & First Time Home Buyer Dec08 Seller Paid Closing Costs
Applying To Building Societies For Mortgages For First Time Buyers
Unlike banks, building societies have no shareholders, so they don't need to make profits for them. Research has revealed that building societies usually offer more competitive rates overall, saying this it does not mean every mortgage deal is a good one and they may fail to come up with the best deal for your personal circumstances.
Choosing A Bank For Your First Time Buyers Mortgage
As well as the traditional high street banks, an increasing amount of financial institutions, such as insurance companies and supermarkets, have set up their own banking subsidiaries with an increase in online ventures. Like the majority of high street players, they offer information and home owner loans over the internet, although with traditional banks you can deal face to face with someone from your local branch if you prefer.
Using Subsidiaries For Your Homeowner Loan
A large number of mainstream lenders, whether banks,insurance companies, building societies or even the supermarket, have set up their own sub divisions to cater for specific sectors of the market. An increasing trend, for example, is to have a self contained subsidiary that will deal with high risk borrowers (often called "non status" or "impaired credit"). It means if one part of the lending organisation has turned you away, another may be able to get you that home owner loan you so much desire.
Mortgage Packagers For That First Time Buyers Mortgage
Some organisations act as packagers, which means they market another lenders product under their own brand. They take care with all the admin and paperwork, for which they get a fee. Packagers' loans often have different rates and features from the lender's own branded mortgages and they are normally available through brokers. You can find mortgages from packagers that meet the needs of borrowers across the whole mortgage market.
Home Owner Loans-Mortgages For First Time Buyers
Working Out How Much You Can Afford For Your Homeowner Loan
Your monthly income , cash savings and credit record all factor into how much you can afford to spend on a home. This information is vital to lenders as well as to yourself. The following factors need to be considered to see how much you can afford on a mortgage:
- Deposit. The deposit is the percentage of the total purchase price you will have to pay in cash. More cash = smaller homeowner loan. Anyone who could afford to pay 25% or more could qualify for a brighter mortgage deal. Less cash = Larger homeowner loan. As you are a first time buyer you may only be able to come up with a 5% deposit, which is the minimum most mortgage providers require. This will enable you to get a mortgage, but if you can come up with at least 10% this will widen your choice of loan. Where will you get the cash? Here are some of the many possibilities:
- Cash in the building society or bank.
- Savings and investments you already own and are willing to sell, but watch out for early surrender penalties and tax implications.
- Valuables you wouldn't mind selling (think of it as exchanging them for something more valuable, such as your first home).
- Windfalls or bonuses from work.
- Gifts or loans from friends or relatives.
2. Mortgages. There will be different elements to your mortgage repayments, depending on which type you will have such as:
- Interest. You have to pay the mortgage lender interest on the loan every month.
- Capital. With a repayment mortgage, part of your repayment goes towards repaying the capital (the amount you originally borrowed on your mortgage).
- Investment. With interest only loans, you may have an investment plan to pay off the capital.
3. Calculating Affordability. How much you can afford every month. Your salary and 50% of last years bonuses will be taken into account. Investment income is not common practice to be accepted and neither is income from property unless you have a buy to let mortgage. Share divedends are only taken into account if you have a 20% shareholding, when you are considered as self employed. Subtract from your income the amount of outgoings you have each month e.g car loans, personal loans, and other regular payments. Do not include debts which will be cleared soon but include variable payments such as credit and store cards.
Considering Other Costs
Most people do not consider all the associated costs with buying their home. As an overview you will probably pay the following:
- Solicitor and surveyor's fees.
- Mortgage indemnity gaurantee (MIG) if your deposit is small. It protects the mortgage provider if you fail to repay. However recently some lenders are dispensing with this.
- Home insurance.
- Moving costs.
- Utilities, they may cost more than they do in your current home.
- Maintenance costs, and a service charge if you buy a lesehold flat.
Trying before you buy.
If you are not sure wether you can afford all the costs involved, estimate their monthly total, and set aside this amount every month.
Tax Credit for First Time Home Buyer Mortgage, $8000 Government Assistance Program for Home Finance
Looking For Your First Home
Most buyers still use an estate agent to help them find their ideal first home. As you do not have to pay them a fee as sellers pay them. The internet is becoming more and more increasingly important as a tool for prespective first time home buyers. However, most people are still using it in addition to using an estate agent, not instead of one.There are a few private sale sites on the internet, but generally many property sites simply refer you to the relevant estate agent for further details.
Private sale listings Websites:
Referring Property Websites:
Many more websites can be found by typing in something like "houses for sale" into a search engine. This will give you a wider scope to find your first property. Under no circumstances am I affiliated with any of the above websites, either will i recieve any commisions from them and are just a few I picked from the Google search engine.
Shopping Around For The Best Deals On Your Homeowner Loan
The number of home sales which took place in the UK over the last few years has been pretty steady at between 2.43 million and 2.47 million a year with a slight decline last year due to the current financial climate. From these sales there are thousands of companies to choose from. Not all lenders charge the same variable rate, and one lender may have a much better rate for you at the time. In addition to this, some are more flexible than others when it comes to lending criteria. Just because one lender has turned you down for your home owner loan, it does not mean you will be turned down by the rest. Use the internet to help you in your search which has lots of valuable information on mortgages for first time buyers.
I hope you enjoyed reading this hub and found the information beneficial, please feel free to leave a comment. If you would like to visit my website to find out more about mortgages and homeowner loans please click here
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