The Property Podcast with Wards Estate Agent

S02E04: First-Time Mortgages Explained

Episode Summary

Are you ready to dive into the world of mortgages but don’t know where to start? Join Garry Wilson and special guest Gavin Welch, Financial Services Director at Wards, as they break down everything first-time buyers need to know in Episode 4 of The Property Podcast with Ward's.

Episode Notes

THE PROPERTY PODCAST with WARDS ESTATE AGENT SERIES 2  

Episode 4 - First Time Mortgages Explained

Basic Explanation of Mortgages:

• Definition: A mortgage is a long-term loan (typically 25-35 years) with lower interest rates than standard loans, aimed at property acquisition.
• Key Nature: Large loan over a long period with a smaller interest rate.

Types of Mortgages and Considerations for First-Time Buyers:

• Deposit Requirement: Minimum 5%.

Lender Schemes:

• Parent-backed savings for mortgage security.
• First Home Scheme offering properties at 30% less market value.
• Favourable rates on new builds.

Evaluation Parameters:

• Single income: 4.5 times the salary.
• Joint income: Combined income times 4.5.

Financial Assessments:

Lenders check three months of bank statements and payslips.

Self-Employed Borrowers:

Requires two years of trading profit records. Assessment includes available funds and repayment capabilities.

Credit Scores:

Importance: Reflects payment reliability and borrowing history.

Improvement Tips:

1. Timely bill payments.
2. Managing existing debt.
3. Mitigation options exist even without credit history or minor past defaults.

Interest Rates and Repayment Structures:

Types:

Fixed Rates

• Recommended for predictability and budgeting.

Variable Rates

• Could fluctuate based on market conditions.

Advisement: Consulting a mortgage adviser for tailored solutions is recommended.

Important Considerations for Long-Term Affordability:

Evaluating stable monthly payments in relation to income and expenses is crucial—planning based on potential changes like family planning or job changes helps ensure sustainability.

Repayment & Exit Fees:

Nature: Charges apply when exiting a preferential rate mortgage early.

• Common Allowance:* Lenders often permit up to10% overpayment per year without fees.

Guarding against exit fees involves careful calculation when planning refinancing.

Protection Policies:

Income protection plans can cover mortgage payments in case of illness or job loss.

Final Tips & Golden Rules For First-Time Buyers:

1 Understand Personal Finances Assess affordability monthly basis

2 Agreement In Principle (AIP) Obtain it without paying fees

3 Register With Estate Agents For early access to properties before they hit portals

4 Organise Paperwork Prepare bank statements, payslips and other required documents expedite process