Buying your first home is an exciting prospect and probably one of the biggest decisions you will ever make. With years of experience helping buyers just like you begin the process, we’re here to help you make those first steps on the property ladder as hassle-free as possible.
To help you along this journey, we have put together our guide to some common questions that first time buyers face when deciding which mortgage is right for them. Don’t miss our tips on organising a mortgage too.
Is there only one type of mortgage?
A mortgage is a loan that you will have for many years, so you should think carefully about your future and what your long term plans are. There are many types of mortgages to suit different situations and lifestyles. Here are the most common:
Fixed Rate Mortgage
The interest on the loan is fixed for a period of time so you know what you will need to pay each month. But, if interest rates go down you will still pay the fixed rate and may pay more than you would have.
Discounted Rate Mortgage
This is a type of mortgage with a variable interest rate. The monthly payment can go up or down. Sometimes it’s not as easy to budget on a discounted rate as the monthly payments could change with interest rate changes.
The interest is only charged on the difference between your current account savings and mortgage amount. So if you have a £150,000 mortgage with £30,000 savings then interest is charged on the £120,000. Interest rates can sometimes be higher than normal ones – and you have to have the savings!
Does what it says: it tracks the Bank of England base rate. If the rate goes up or down, your payments will follow. Usually incurs arrangement fees and early repayment charges.
Standard Variable Rate
This is often a higher interest rate with no deals. It’s what most lenders will revert you back to once any discount, fixed or tracker mortgage term has ended.
More help for first time buyers
So you have your deposit, know what you can afford and have decided on the best mortgage for you. The next step is to decide on the type of property you want!
For more tips on how to buy your first home, make sure you download our FREE first time buyers checklist and guide, which we’ve designed to support you throughout the process – from the initial property searches to completion. It also includes a handy checklist that you can print and refer to throughout!
Be sure to check out our latest properties for sale in Essex too – we might just have the perfect home for you!