First Time Buyer Mortgages

As a first-time homebuyer, you may experience a mix of emotions—excitement, nervousness and of course, concern. Rest assured, we understand and appreciate the journey of homeownership. Our team is well-versed in addressing your queries about the entire process. We’ll discuss timeline, application details, required financial information,  credit score impact and more.

The good news is that we have the expertise to guide you. With our extensive network and strong lender relationships, we can recommend the most suitable mortgage provider and the ideal deal for your unique situation.

At Argyll Drummond, our experienced team specialises in handling home loan applications for individuals from diverse backgrounds. We have experts dedicated to serving first-time buyers. You can trust that you’re receiving advice from professionals who have navigated it all and will support you throughout the process.

Contact us for a free initial consultation, where we’ll assess your circumstances, understand your goals and address your questions. We’ll explore mortgage preferences and provide clear recommendations for your next steps, empowering you to move forward confidently in your homeownership journey.

Consulting a qualified mortgage broker can be invaluable for first-time homebuyers. We aim to provide clarity on the process and guide you through practical steps.

During consultation, key points covered include

• Explanation of the legal process and stages of purchasing a home, from mortgage offer to completion.
• Review of income and expenses to create a realistic budget, considering potential future changes.
• Assessment of deposit impact on interest rates, mortgage terms, and monthly payments.
• Evaluation of lenders’ affordability assessments and criteria to identify the best options.
• Explanation of costs like Stamp Duty, legal fees, and property assessment fees.
• Discussion of property surveys, necessity, options and associated costs.

Once we understand your circumstances and goals, we research the market to find the best lender and product. 

Upon completion, we are happy to stay in touch. When your mortgage’s introductory period ends, we can assist in evaluating options with existing or new lenders for the best deal.

As experienced mortgage brokers, we can obtain exclusive deals and rates regardless of your buyer status. With access to the entire market, we locate lenders, deals and rates spanning the mortgage spectrum, from well-known high street options to niche-market products from specialised lenders.

The deposit amount required for first-time homebuyers is not fixed, but typically a minimum of 5% of the property value is needed to secure a mortgage. However, this requirement can vary over time and in response to economic changes.

Exceptions to this general rule may occur if you purchase a property at a price below the market value, such as through a family member, and receive a gifted equity deposit. It’s important to note that a larger deposit generally leads to better mortgage terms and interest rates.

Deposits can be sourced from various channels, including regular savings or gifts from family members. Lenders generally accept gifted deposits as long as the funds are not repayable and do not grant the giver any rights to reside in or have a financial stake in the property.

Regardless of the deposit size, lenders will assess affordability to determine the borrowing amount they are willing to consider.

In the past, mortgage offers for first-time homebuyers were typically based on a multiple of their annual income, usually ranging from three to five times their salary. However, with the increasing diversity of society and variations in disposable income usage, affordability has become less predictable, rendering this method obsolete.

Presently, lenders utilise their own affordability calculators, such as the Money Helper affordability calculator, which take into account various financial commitments, income, and potential future expenses based on past trends or external sources like the Office for National Statistics. Lenders also exhibit greater flexibility by considering income from self-employment and certain types of benefits.

After assessing your income and expenses, your advisor will provide an accurate estimation of the maximum mortgage amount you can borrow. Occasionally, this calculated amount, taking into consideration your anticipated monthly costs, may exceed what you are comfortable borrowing, allowing for flexibility in choosing your mortgage. Furthermore, some lenders impose a maximum loan criterion, capping the borrowing amount at around 4.5 to 5.0 times your annual income, regardless of affordability assessments. The specific figure will depend on various factors.

Mortgage calculators can be useful for first-time homebuyers. These handy online calculators  allow individuals to estimate their potential monthly mortgage payments based on factors such as the loan amount, interest rate, and repayment term. They can provide a quick and convenient way to get an idea of what to expect in terms of affordability and help in making informed decisions.

By inputting information such as the purchase price of the property, the desired down payment, and the interest rate, a mortgage calculator can provide an estimate of the monthly mortgage payment. This can help buyers determine if their budget aligns with their desired property and identify the potential impact of different scenarios, such as adjusting the down payment or exploring different loan options.

While mortgage calculators provide useful estimates, it’s important to note that they are not comprehensive and may not account for all the factors considered by lenders in their assessments. Consulting with a mortgage advisor or lender is still recommended to get a more accurate understanding of affordability and the specific mortgage options available.

First-time homebuyers often inquire about their borrowing capacity, as it directly impacts the properties they can afford and the offers they can make. Traditionally, lenders determined this amount by applying a multiple to the borrower’s annual income. However, since 2014, lenders have adopted an affordability model that takes into account various factors, including the borrower’s age, deposit or equity, number of dependents, existing credit commitments, childcare expenses, pension contributions, council tax, travel costs, and ground rent or maintenance payments (if applicable). This approach is more comprehensive and reflects the borrower’s day-to-day financial realities.

It’s important to note that each lender has its own criteria and methods for calculating the maximum mortgage offer, and they generally do not differentiate between first-time buyers and those moving homes. However, individuals who are moving home may already have equity tied up in their existing property, which can impact lending terms, rates, and amounts. Moreover, lenders typically refrain from offering more than five times the applicant’s annual income. While many lenders provide online calculators on their websites, these should be used cautiously as they do not consider all the detailed information typically required for a thorough assessment.

To obtain a more accurate evaluation of mortgage options, it is advisable to consult with an adviser who works with the specific lender or engage a broker who has access to lenders’ comprehensive calculators. As unlimited mortgage brokers, Argyll Drummond is capable of providing such assessments across a range of mortgage products.

The criteria for qualifying for a mortgage with a poor credit history are similar whether you are a first-time buyer or a homeowner. Lenders will review your credit file to assess any instances of bad credit, ranging from minor issues like late card payments to more serious cases such as defaults, County Court Judgments, or bankruptcy. They will also consider the timeframe since these incidents occurred and your current financial behaviour, as people and circumstances can change over time.

Apart from your credit file, lenders will carefully examine your personal and business bank statements to gain a comprehensive understanding of your overall financial conduct. While having a poor credit history does not automatically disqualify you from applying for a mortgage, you may be required to provide additional supporting evidence to strengthen your case.

The assessment process takes various factors into consideration, and presenting your application in the most favourable manner to the lender can significantly increase your chances of approval. Seeking assistance from an experienced mortgage adviser can be highly valuable in this regard. The team at Argyll Drummond is here to support you throughout the application process and guide you towards obtaining the mortgage you need.

As a first-time buyer, you have access to the same interest rates as any other mortgage applicant. However, the differences in terms may arise due to the level of deposit you are able to provide.

Typically, the higher the deposit you can put down, the more favourable the terms and interest rates you are likely to obtain. Established homeowners who have already been paying off their first mortgage may have equity tied up in their property, which can be considered as a deposit and work in their favour.

Some lenders offer special rates exclusively for first-time buyers. These rates are designed to attract new business and often come with additional bonuses or benefits. These perks can include free valuations or surveys, cash back incentives, or the waiving of certain fees.

To explore what incentives or benefits may be available to you as a first-time buyer, I recommend speaking to one of our experienced advisers at Argyll Drummond. We can provide guidance tailored to your specific circumstances and help you uncover potential advantages in your mortgage journey.

A guarantor mortgage is a loan where a family member, often a parent, provides additional security by agreeing to cover any missed repayments. If the guarantor is unable to afford these repayments from their regular income, their other assets, such as savings or property, are used as collateral for the loan.

In such cases, the lender may seize the guarantor’s savings or sell their property to recover any shortfall on your mortgage. If necessary, the lender may take possession of the property to retrieve the loan. However, if the value of the property falls below the outstanding loan amount, a repossession may not be sufficient to cover the debt. This situation is known as negative equity.

There are several reasons why a mortgage in principle (also known as a decision in principle or agreement in principle) may be declined:

Poor credit history: A history of missed payments, defaults, CCJs (County Court Judgments), bankruptcy, or high levels of debt can result in a mortgage in principle being declined.

Insufficient income: If your income is not considered sufficient to meet the mortgage repayments based on the lender’s affordability criteria, your application may be declined.

Affordability concerns: Lenders assess your overall financial situation, including existing debt obligations, living expenses, and potential future costs. If the lender determines that the mortgage is not affordable given your circumstances, the application may be declined.

Inadequate deposit: If the deposit you are able to provide is deemed insufficient by the lender, it may result in a declined mortgage in principle. Typically, a larger deposit increases your chances of approval.

Employment instability: Lenders often prefer borrowers with stable employment and income. If you have recently changed jobs, are self-employed, or have irregular income, it may raise concerns for lenders and lead to a declined application.

Property valuation issues: If the lender’s valuation of the property you wish to purchase falls short of the agreed purchase price, it may impact the mortgage in principle and potentially lead to a decline.

Policy changes: Lenders may revise their lending policies or criteria, which can result in a change in their decision-making process. If your circumstances no longer meet their updated criteria, your application may be declined.

It’s important to note that each lender has its own specific criteria and assessment process, so it’s advisable to seek advice from a mortgage broker or speak directly with the lender to understand the reasons behind a declined mortgage in principle and explore potential alternatives.