Getting your 1st mortgage can be daunting! A financial advisor can help! This easy to use guide contains a number of suggestions for getting your first mortgage.
1. Dont get too focused on the Short Term
When house prices rapidly fall or rise this causes uncertainty. When buying a house it is important to think about the long term. If house prices are expected to fall for the next 6 months it doesn't necessarily represent a reason to avoid buying.
2. Good things come to those who wait!
Having said the above, saving for a decent deposit will mean that the array of mortgages choices available to you will improve. Usually the higher the deposit, the higher the mortgage choice. Further, if house prices drop then this improves the ratio between house prices and income, hence affordability. Waiting could enable you to clear other loan and credit card debts. A financial advisor can show you mortgages available to you.
3. Budget carefully and realistically
Setting a budget that doesn't stretch you too far is really important. A house on a slightly better street or a house with an extra bedroom is often very tempting. We shouldn't over exceed our affordability though as this can lead to further debts, missed payments and potentially repossession.
4. There is no shame in downsizing aspirations
An overstretched budget can mean an unhappy lifestyle. By purchasing a smaller property affordability increases and the mortgage is smaller. What is the point in working all of the time only to pay off the mortgage? In time we often move up the housing ladder as affordability increases. A financial advisor can indicate likely monthly repayments.
5. Reduce debts
When a mortgage company is deciding whether they will loan to you and how much they take into consideration a whole range of factors including your monthly outgoing payments. If you can reduce unsecured loans, car loans, credit card debt etc then you will find yourself in a better position to gain a mortgage.
6. Explore a longer mortgage period
Taking a longer term mortgage is often met with negativity, after all the faster you can repay a loan the less it will cost to repay. However when you are first getting a mortgage a longer term can increase affordability. If you think you will be able to overpay and eliminate your mortgage in 10-20 years then you should consider this. A financial advisor can advise you on longer term mortgage products.
7. Joint Mortgages
Buying with a partner can increase your buying power - these types of mortgages are also now available to friends who want to buy together. You share the deposit requirements and the repayment liabilities. A financial advisor can advise on the relevant joint mortgage products available.
8. Fixed/Flexible/Repayment Mortgages???!!
There are loads of different mortgages, repayment methods, interest rates... it can all seem very daunting when first starting to look for a house. Different mortgages may appeal to different people. A financial advisor can really help identify the appropriate mortgage for your individual needs. First time buyers should know the benefits of:
Fixed Rate mortgages which offer certainty for the fixed period
Offset mortgages - beneficial to those who have savings in their current account
Repayment vs. Interest only - interest only means you just pay interest on the loan. This is not sustainable unless you can find an alternative way to repay the debt.
A financial advisor can help with getting the right mortgage tailored to suit your particular needs.
