The golden age of first time buyers has long gone. Ten years ago you would be able to get a mortgage with a sky high loan to value (LTV) and buy a house in a rising market, certain in the knowledge that you could sell it in a couple of years for a healthy profit. Unfortunately, times have changed significantly and without a deposit of at least 20-25% of the house value, you can forget about buying your first home.
Unlike second time buyers, third time buyers and so on, first time buyers need to raise their entire deposit in cash form. For others, it is likely that their deposit will be come almost entirely from the profit they make from selling their current home. The good news, and there is good news, is that if you have a deposit, banks and building societies are more than willing to lend, and there are some pretty good deals out there.
The best mortgages for first time buyers aren’t necessarily those that offer the best rates, or those that allow the highest LTV, or even those that are fixed for the longest time; instead it is those that find the right mix to match your circumstances.
For instance, if you have a large deposit, you should contact Santander. They have a range of mortgages between 4.09% and 4.16% fixed for two – five years with a maximum LTV of 75%. If you are already a Natwest customer with a 40% deposit, you can apply for their 4.09% (rising to 4.2%) fixed five year deal. Staying with Natwest, but open to all, is their two year fixed 4.19% deal which is great for those with a smaller deposit as it allows a maximum LTV of 80%.
First time buyers in Northern Ireland should think about contacting their local Northern Bank as both of their top standard mortgages offer a 2.9% APR for the full term and have a maximum LTV of 90%.
As a first time buyer, the first thing you should do is to search on the internet for the best deals. Find the deal that you want and approach your own bank first. If you inform them of a rival product that you are thinking of taking, quite often they will be able to put together a one off deal to keep you. Try not to get too sucked in by the headline APR that you are offered; find out how long that is fixed for and what it reverts to after that. Find out also if there are any early repayment penalties or any costs for the product.