Buying your first home is hugely exciting — but it can also feel daunting. Here's everything you need to know to find the best mortgage and buy your first home with confidence.
One of the things many first-time buyers worry about most is applying for a mortgage. With thousands of products available, how do you know what to go for? Choosing a mortgage is more straightforward than you might expect — here we explain what you need to know to find the best one for your first home.
It's a good idea to work out roughly how much you can borrow before you go house hunting — there's no point picking your ideal home only to find it's beyond reach. Traditionally, lenders calculated the amount as a multiple of your salary (for example, three times your gross annual earnings). Most lenders today advance funds according to affordability and will ask for details of your incomings and outgoings, also factoring in the impact of future rate rises. Our mortgage calculator gives a rough idea, but your ability to borrow isn't down to income alone — your credit score matters too. If you've had bad debts in the past, your application could be turned down.
You'll almost certainly need to save for a deposit. Some lenders will advance up to 95% of the property's value, meaning a minimum deposit of 5%. You'll have a wider choice with a 10% deposit, and the very best rates are usually reserved for borrowers with a larger deposit — in some cases as much as 20%. Aim to save as much as possible so you have access to a wider range of products and more competitive rates.
In addition to your deposit, budget for the upfront costs that come with buying a home, which include:
Choosing the right first home loan is just as important as finding the right first home. Your loan needs the features that suit your personal circumstances and help you pay it off sooner. Whether you already have a clear idea of the loan you want or you'd like to talk through your options, our home loan experts will recommend the best loan for your individual situation.
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