Buying your first home is an exciting milestone but navigating the mortgage market can feel overwhelming. Here at Own Homes, we’ve helped many first-time buyers in Stevenage and the surrounding areas find their perfect property and we understand the questions that you’ll have about securing finance.
What is a Mortgage?
A mortgage is simply a loan secured against your property. You’ll borrow money from a lender to buy your home, then you’ll repay it with interest over an agreed term, typically 25 to 35 years. The key to finding the right mortgage product that suits both your circumstances and budget.
How Much Deposit Do You Need?
Most lenders require a deposit of at least 5% of the property’s purchase price, though by putting down 10% or more you’ll get access to better interest rates and a wider range of products. The bigger your deposit is the less you’ll need to borrow and the lower your monthly repayments will be. If saving a substantial deposit feels difficult, don’t be discouraged. Several government schemes exist to help first-time buyers get onto the property ladder with smaller deposits.
Understanding the Different Mortgage Types
Fixed-rate mortgages lock your interest rate for a set period, usually two, three or five years. Your monthly payments stay the same regardless of what happens to interest rates, making budgeting uncomplicated.
Variable-rate mortgages fluctuate with the lender’s standard variable rate or the Bank of England base rate. Your payments can go up or down, which offers flexibility but less certainty. Most first-time buyers choose the fixed-rate deals, as they provide stability during early years of homeownership.
Government Schemes for First-Time Buyers
Several initiatives can make buying more affordable:
- The mortgage guarantee scheme helps you to buy with just a 5% deposit on properties that are worth up to £600,000
- Shared ownership allows you to buy a share of a property (between 25% and 75%) and pay rent on the remainder
- The First Homes scheme offers discounts of 30% to 50% on new-build homes in England
Improving Your Mortgage Application
Lenders assess your affordability carefully. Before applying, check your credit score and correct any errors on your credit file. Avoid taking on any new credit in the months leading up to your application and register on the electoral roll at your current address.
Keep your finances tidy: a stable employment history, minimal debt and evidence of sensible spending habits all work in your favour.
Need help on getting your first mortgage? Get in touch, we’ll help talk you through it.