There are many benefits to buying a home. Money paid out each month on rental of a property is money lost. Owning a home allows the homeowner to make a mortgage repayment each month, which will increase their asset wealth rather than the wealth of their landlord. Furthermore, individuals who own there own home are free to make changes to it. Alternations may range from a new coat of paint to extensions and conversions. Investing money in a home is the safest way to plan for the future.
When buying a home there are a number of factors to consider. Expenses include, legal fees, estate agent fees and stamp duty to name a few. Most mortgage providers offer specialist first time buyer mortgages as well as first time buyer guides. These guides provide excellent advice, such as information on fixed rate, variable rate and tracker rate plans, repayment options, moving guides and budget planning.
A first time buyer mortgage may offer a number of different benefits. Some lenders will offer a mortgage without a deposit, known as a 100 percent mortgage. Others offer a combined interest only and capital repayment plan. With such, for an initial period, typically lasting three years, the mortgage repayments will be interest only, after this time the repayments will switch to capital and interest. Such a plan allows first time buyers to afford more borrowing in the short-term when their finances are most restricted.
Many first time buyers have a very limited budget and thus may be most suited to the certainty of a fixed rate mortgage. Such a plan will have a set interest rate, which will stay constant for the term of the mortgage. This means repayments are the same each month. A fixed rate mortgage term typically lasts for between three and five years but some lenders offer a fixed rate plan for up to ten years.
An alternative option for first time buyers is co-ownership. This could be with friends or with a company. Some home building companies offer a shared ownership scheme. Another option for a first time buyer is to find a senior person, usually their parent, who is willing to act as a mortgage guarantor.
To find the lowest rate a shopper should compare home loans offered by a selection of different lenders. When comparing mortgage plans, in addition to the initial rate, the Annual Percentage Rate (APR) and any charges, such as early repayment or arrangement fees should be taken into account. Once a plan is in place it should be reviewed regularly.
