Buy to Let Mortgages for First Time Buyers

Buy to Let Mortgages for First Time Buyers

Compare UK Buy To Let Mortgage Deals

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There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

Compare Mortgage Deals For First Time Buyers

For first time buyers finding the best mortgage deal to suit your circumstances is of the utmost importance, as buying property is probably one of the largest investments you will ever make.

To help get the best price on your first mortgage, it is always advisable to shop around using mortgage comparisons as much as possible. There are also a variety of different mortgage deals for first time buyers that may be available depending on the circumstances. The following are some examples of the different interest rate deals that exist:

  • Fixed Rate Deals that provide first time buyers with interest rates that are guaranteed to remain the same for the duration of the agreed period.
  • Tracker Rate Deals that have their interest rates set according to the Bank of England’s base rate.
  • Discount Mortgages may provide customers with a tax free lump sum at the start of the period, although customers should be wary of higher interest at a later date

Please see our table above for mortgage comparisons on the different deals available. Before searching for an appropriate interest rate deal, it is also advisable to carefully consider your repayment options – Repayment vs Interest Only.

Repayment mortgages are generally seen the most popular and ‘secure’ type of mortgage agreement, although are initially more expensive compared with interest only mortgages.
Using this type of agreement, customers will be expected to repay the initial loan on a monthly basis with interest included on top, until entire loan has been repaid in full. The more that is paid off, the less that the interest rates will affect the cost of repayments.
Using interest only agreements, first time buyers will only be expected to repay the interest on their mortgage, and not the initial loan until the mortgage period has ended.
Because of this, monthly repayments for this type of mortgage are less compared with a repayment agreement. However it is important that a funding plan is put in place to ensure the mortgage is repaid at the term end.

Shop around to find the best mortgages for first time buyers and get the mortgage that suits your needs and circumstances.

Finding the best mortgage for first time buyers may seem like a tricky task for inexperienced borrowers, a mortgage is after all an important financial commitment that is not without its risks. In order to find a deal that is best suited to the customers individual requirements, it is always advisable to conduct appropriate research by comparing mortgages deals from different lenders.

Realistically, there probably is no ‘best’ mortgage for first time buyers, as finding an appropriate mortgage may depend on a variety of different factors. The best deal for one person may not be entirely suitable for another, first time buyers should consider:

  • Their savings and how much they can realistically spend
  • The required deposit
  • The current financial climate
  • Their choice of mortgage
  • The various different types interest rate deals

If you are searching for a suitable first time buyer mortgage, you may wish to see our mortgage comparisons tables above for more information on the various offers that are available.

Broadly speaking, all mortgages are generally divided into two separate categories, known as repayment and interest only.

Using an interest only mortgage, the borrower will be expected to regularly repay the interest on their loan for a set period of time until the end of the mortgage agreement. After a set period of time, the customer will also eventually be expected to repay the entire loan, usually after having saved money using a suitable investment vehicle over a number of years.

Generally speaking, the lender will expect the borrower to use a suitable investment vehicle that will allow them to make this payment at the end of the mortgage.

Using a repayment mortgage, customers are essentially expected to gradually pay off the entire loan plus interest over a number of years until the debt has been completely repaid. The advantage of this type of mortgage compared to a repayment mortgage is that customers will not have any large payments to make at the end of their mortgage.

Buying a property can be an expensive exercise and it is important that you are aware of all the costs that come into play when buying your home.

The costs relating to your mortgage will be set out clearly by the lender in what is known as the “Keyfacts” document provided to you.

These costs may include:

  • Arrangement Fee – Charged by the lender to cover the administration costs of processing your mortgage. This will vary from deal to deal. You normally have the option of adding this fee to your mortgage but this will increase your cost of borrowing over the mortgage term.
  • Mortgage broker Fee – If you have used a mortgage broker to help arrange your mortgage for you then a fee may be charged which will be outlined in your keyfacts document.
  • Mortgage Account Fee – Applied by the lender at outset when you first take out your mortgage to cover the set up and termination costs of your mortgage.
  • Valuation Fee – Charged by the lender to value your property in assessing the value for mortgage purposes.
  • Re-inspection fees – If a lender has required you to make agreed repairs to the property a re-inspection may be required
  • Higher lending charge – If you are borrowing a high loan to value the lender may decide they wish to insure the possibility that you may need to sell your home and this results in a loss.
  • Early redemption charges – If you pay off part or all of your mortgage earlier than expected the lender may charge you a fee – this will be covered in your keyfacts document.
  • Mortgage exit fee – Paid to your lender when you repay your mortgage.
  • Insurance costs – as part of your mortgage you may be encouraged to take out insurance either by a broker or the lender to cover buildings insurance and other optional insurance such as mortgage life insurance.

  1. If you are unsure of your mortgage options seek mortgage advice from a FCA regulated independent mortgage broker
  2. Maximise the deposit you can put down on your property to benefit from the most competitive Mortgage interest deals.
  3. Read the Lender Mortgage key facts document carefully to understand the costs being applied by the lender.
  4. Ensure that you are comfortable that mortgage repayments (whether repayment or interest only) fall within your budget.
  5. Remember that mortgage discounts are temporary and borrowing rates may go up when the discount period ends.
  6. If you are remortgaging ask your current lender what deal they can offer you as well as shopping around.
  7. If you lender’s valuation of your property is too low ask them to reconsider and provide supporting evidence from the sale price of other properties in your area.
  8. For interest only mortgages ensure that you plan carefully how to pay off your mortgage and check at regular intervals that your repayment strategy is on track.
  9. At the time of writing interest rates are at record lows. While borrowing is cheap now this situation may change so factor in a rise in interest rates into your budgeting calculations.
  10. Consider mortgage unemployment insurance in the event that you lose your job. This may provide useful breathing space in covering mortgage repayments while you look for a new job.

It is very important that when considering a mortgage you work out how much you can afford.

While there is a greater onus on mortgage lenders to lend responsibly you will also need to consider what level of borrowing is appropriate for your circumstances.

In simple terms lenders will base how much you can borrow on a multiple of your income (joint income for couples). However there are a number of factors that will determine what you can borrow from a mortgage company.

Mortgage lenders are required to apply strict rules to what they can lend to you based on your personal circumstances. In assessing affordability lenders will not only look at your income but also your outgoings e.g. monthly household bills. Lenders will look at your bank statements typically over the last 3 months to determine whether you can afford the mortgage you are looking for.

Many mortgage deals have initial periods where preferential terms are offered and borrowing costs are lower than normal – when this discounted period ends make sure you can afford any reasonable increase that may kick in. In assessing affordability lenders will take into account your income and outgoings and your current employment history. In calculating disposable income your total income will be taken into account less other debts you may have and living expenses.

The lender considering your mortgage application will have their own method of assessing affordability but it makes sense to do your own budgeting calculations to ensure the monthly repayment requirement is well within your budget.

In calculating how much you can borrow the lender will apply a maximum amount you can borrow called the loan to value of the property (LTV). E.g. If you are a first time buyer the lender may stipulate a LTV of 95% which means they are prepared to lend up to 95% of the value of the property (this will be assessed by the mortgage company’s own appointed surveyor). In this scenario the first time buyer would be required to put down at least 5% deposit towards the property purchase. The mortgage rate deals offered by a lender will be affected by the level of deposit that can be put down.

Generally speaking the higher the deposit that can be put down the better the mortgage rate can be achieved.

See how much you can borrow on a mortgage »