FIRST TIME MORTGAGES
Once upon a time there was a thing called the 100% mortgage which was fairly commonplace. However, a big financial dragon surfaced and they are now exceedingly rare and contain fearsome and exacting conditions.
Now first time buyers are expected to have upward of 20% cash of the purchase price swilling around in their account. If you can meet that 20% figure then a whole vista of options exist out there for you.
Did we say 20%? We did. But there are other costs that need to be taken into consideration — Stamp Duty, and in Scotland, Land and Buildings Transaction Tax. These are the taxes you pay for the privilege of being able to buy.
Your Financial Planner will help you explore the many and varied mortgage options: for example fixed or variable rates, offset mortgages and trackers.
If you are buying a property for investment with either a buy-to-let loan or a let-to-buy loan you can still pay the mortgage on an interest-only basis. This will keep the monthly payments lower, but you will still need to find the capital to buy the property at the end of the term. For the roof over your own head, the loan has to be on a repayment basis, so that by the end of the term you wholly own the property.
You may find that mortgage companies are initially keen to get your business will offer attractive but introductory rates. The key word is ‘introductory'. It’s a bit of tease. The dreamy frog you kissed will eventually leave and you’ll wake up next to a Standard Variable Rate (SVR).
But you can shop around.
However, you need to have a minimum of 20% equity in the property to do this and you also need to be aware that if you wish to dump your mortgage after it’s grown tiresome and demanding then you may be hit with nasty financial penalties.
Two final words: Mortgage Protection. Again, your Financial Planner will walk you through this but if you get ill or are injured for instance then these two words will suddenly matter.
'Introductory mortgage rates are just that. The dreamy frog you kissed will eventually leave and you'll wake up next to a Standard Variable Rate (SVR).'