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Buying your first house, what do you remember?
Buying your first house can bring with it a rollercoaster of emotions. We want to know what you remember from when your brought your first home and got your first mortgage?
My memories are still fairly fresh as I purchased my first home last year. Before joining the property ladder I can honestly say I didn’t have a clue how things worked. I found the house, but then hit a stumbling block and didn’t know where to go next. The house was a brand new property so the builders assigned us to a solicitor and a mortgage advisor. From there we began the task of applying for the mortgage.
The mortgage application itself was easy enough, the waiting however was the worst part of the whole process. At the time there were lots of news stories about mortgage lenders not giving mortgages unless you had a perfect credit score, which worried me. I had to wait two weeks to find out and it was the longest two weeks of my life!
As soon as I got my approval everything steam rolled forward. From start to finish the process lasted six weeks and most of the time I found I was trying to catch my breath as things moved so quickly. My one recommendation is to make sure you have a mortgage advisor that is available to answer your questions as you will have a lot and things will run a lot smoother if you have someone that can cater to your needs.
With House Prices Falling Again, Is This The Perfect Time To Buy?
The latest house price figures from Halifax show a 1.8% drop on last year’s average house prices for the third quarter (www.thisismoney.co.uk). As prices continue to fall, is this a good buyer’s market?
Helping your children onto the property ladder
It was recently announced that the 100% mortgage was coming back… on one condition, that parents or guardians of the mortgage holders agree to be guarantors for the loan. Without the 100% mortgage the typical first time buyer has to have a deposit of 20%.
The average house in the UK is currently £166,256 meaning the deposit needed would be £33,251.20 a sum that many struggle to save for.
Parents are choosing to help their children onto the property ladder by assisting them with the deposit. Some parents are therefore remortgaging their own property in order to do this.
Many parents understand that their children will possibly never get onto the property ladder without their help and see their own involvement as the only way.
Lesley recently remortgaged in order to help her daughter onto the property ladder.
“I didn’t buy my first house until I was 34 years old. I didn’t want my daughter to have to go through what I did, I was in a position where I could release some equity with a remortgage and felt that this was the best thing for me to do to help her.”
Jargon Buster
When going through the mortgage process the associated jargon can often be confusing. Never fear our jargon buster is here to help.
APR
APR stands for “annual percentage rate” in relation to a mortgage or other loan.
Arrangement fee
Some mortgages and financial products come with an arrangement fee which can range from a few pounds to over £1,000.
Capital and interest mortgage
This refers to a standard repayment mortgage where each monthly payment is paying off the capital of the amount you borrowed along with the interest.
Equity
Equity is the difference between the current house value and the outstanding amount of mortgage balance.
Fixed rate mortgage
The interest rate for your mortgage is fixed for a certain period of time and will not vary during that period, regardless of what happens to the Bank of England base rate or the lender’s standard variable rate.
Flexible mortgage
This type of mortgage gives you greater control of your mortgage, including extra benefits such as making overpayments, underpayments or taking payment holidays.
Interest only mortgage
During the term of your mortgage you only pay the interest each month and the capital balance remains unpaid, meaning that at the end of the mortgage term you will still owe the amount you originally borrowed.
Standard Variable Rate
A standard variable rate (SVR) varies from lender to lender, and although the SVR can change at the lender’s discretion, the level of the SVR is often influenced by changes in the Bank of England’s base rate.
Tracker Mortgage
The interest rate on a tracker mortgage usually tracks the Bank of England base rate either by a set percentage above or below for a set period of time.
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Mortgage lending increased throughout August
Mortgage approvals have reached the highest level since December 2009, figures released today show. During the month of August 52,410 house purchase mortgages were approved, which is the highest number since December 2009.
The average number of approvals over the previous six months stood at 47,551 for house purchase mortgages, with August seeing almost 3,000 more than July.
The number of remortgage approvals also saw a rise with 34,668 going through compared to 31,652 in July.
The figures released today also show that lending to individuals rose by £1.0billion in August leaving the 12 month growth rate unchanged at 0.9%.
Lending secured on properties rose by £0.6billion to £11.7billion, in line with the average increase over the last six months.
What is a mortgage?
Your house will probably be the biggest purchase you ever make and your mortgage is likely to be the biggest loan you ever have. Therefore it is vital that before you set off on your journey onto the property ladder you understand the process.
A mortgage is the name given to the loan which you obtain from a lender in order to finance the purchase of a property. The dictionary states a mortgage is:
“An agreement under which a person borrows money to buy a property.”
To purchase a property, you will be required to put a certain amount of money forward in the form of a deposit and the rest of the purchase price will be covered by a loan secured against the property; the mortgage. You can have the mortgage over a fixed term, 20 years for example, and you will be required to make monthly payments towards the outstanding balance until it has been paid in full.
Your monthly payments are usually determined by your mortgage amount and interest type: whether it be fixed rate or variable rate, for example.
It is always extremely important to stress the importance of keeping up the repayments on your mortgage. Failing to do so could result in serious consequences and risk you losing your home.