11 Jan 2018

Everything a first-time buyer needs to know about mortgages

Everything a first-time buyer needs to know about mortgages

Choosing a mortgage deal is one of the first steps when buying a new home.

To help with this decision and to allow you to find a mortgage which best suits your needs, we have put together a first time buyers’ guide to mortgages. This covers the different types of mortgages available, deposit rates, and how we can help.

What is a mortgage? 

A mortgage is a loan from a bank, building society or financial institution to a borrower that will assist the borrower in the purchase of a property in exchange for title to that property.

The buyer must then repay the loan in monthly instalments usually over a term of 25 years or more. Once the balance of the loan is cleared in full, the title then transfers back to the owner of the property.

What are the different types of Mortgages?

The two most common types of mortgages available in the market place are fixed rate and tracker.

What is a fixed rate mortgage?

This is where the interest rate remains the same throughout the period of the deal. Fixed rates are usually for a term of between 2 to 5 years where the borrower will pay fixed monthly repayments. At the end of that period the borrower has the option to remortgage.

One benefit of this type of mortgage is that it gives you security as you will know exactly what your monthly repayments will be each month over the term of the mortgage.

What is a tracker mortgage?

A tracker mortgage varies depending on the Bank of England base rate. This can change the cost of monthly repayments depending on the current rates and is also available over terms from around 2-5 years. 

The benefits of a tracker mortgage come when the interest rates are low, but can often see buyers jumping to a fixed rate mortgage once the rates begin to increase.

How much do I need for a deposit?

Most lenders will require at least a 5% deposit, which is 5% of the purchase price of the property you are intending to buy. If you were buying a property at £120,000 a lender will look for £6,000 as a deposit. 

The majority of lenders will offer a preferential rate the higher the deposit that you have to put down, so having a bigger deposit saved is going to leave you in a better position as a potential buyer.

How can I get a mortgage?

With so much choice, the best option is to speak to an Independent Financial Adviser (IFA) who has knowledge of the whole market. An IFA like Aberdein Considine has access to exclusive deals that are not available on the high street so can help you find the best deal on your mortgage.

Book an appointment

If you would like to book a free mortgage appointment with one of our independent advisers, click here.

Your home may be repossessed if you do not keep up repayments on your mortgage. 

Help for first-time buyers

Aberdein Considine are giving first-time buyers the unique opportunity to save £250 on their first home purchase.

The first 200 people to register for our First-Time Buyer Open Days across Scotland will be gifted a £250 voucher to help cover the legal costs of their first purchase.

If you are planning to buy your first home this year, it's an event (and discount) not to be missed.

To register for one of our Open Days and to claim your £250 discount, click here.

Please correct the errors below before submitting your request:

Get in touch

Our dedicated client contact team prefer to receive enquiries through our contact form. We'll endeavour to get back to you within 24 hours or during the course of the next working day.