Mortgages for First Time Buyers
There are certain mortgages that are aimed to first time buyers. These mortgages offer deals to first time buyers that they can benefit from. However, anyone looking into a mortgage for the first time should look over the terms of what is being offered to ensure they are receiving the best value and a mortgage that is right for them.
One type of mortgage that is typically offered to first time buyers is a cashback mortgage. A cashback mortgage is a mortgage where the lender will give the applicant a sum of money upon the completion of the mortgage. This sum of money can be used by the applicant for various things, such as solicitor fees, furnishing for the new home, or other expenses involved in a new purchase. A cashback mortgage can be extremely useful for first time buyers, as they may not have the mean to pay for these additional expenses. However, with a cashback mortgage there are prepayment penalties that are charged by the lender should the borrower pay off the mortgage early. These prepayment penalties can be as much as six months repayments on the loan. Because of the prepayment penalties, a cashback mortgage will mean that the borrower will be locked in to a mortgage for a set number of years with an uncompetitive rate.
The other type of mortgage that lenders offer first time buyers is an introductory discounted rate offer. This type of mortgage has a low fixed interest rate for a specified amount of time. This can be beneficial for first time buyers, as the low fixed rate will ensure that the monthly repayments are constant as well as easy to manage during the start of the mortgage. However, if you do not take advantage of the low interest rate by saving up the additional savings, you may find it difficult to meet the payments once the higher interest rate kicks in. Be aware of what rate you will be charged once the introductory period is over, and also know when you will have to start making higher payments. This way you can prepare yourself for when the time comes.