If you are a first time buyer and you want to work out the cost of your mortgage repayments then use our free online calculator as quick reference.
For many people, the thought of buying their first home can be very exciting yet quite scary at the same time. However, the process is not as complicated or daunting as it first seems, particularly if you are armed with a few basic facts and figures and you complete the required homework beforehand.
Fortunately, there is plenty of good advice at hand for those considering taking the plunge, including a lot of useful information that we have provided on this very page which should help put your mind at rest before you decide to make that all important purchase. If you are buying for the first time, then it is important to realize that you are not strictly limited to borrowing products that are specifically designed for, or aimed at, first time home buyers.
Of course, you will obviously need to make sure your finances are in good standing order if you want to improve your chances of being approved for one of the more competitive mortgage deals and you will also need to have the funds for a deposit.
A mortgage is a long-term borrowing product designed to spread the cost of buying a home over an extended number of years. Most have loan repayment terms lasting 25 years, although this period could be shorter or longer depending on your borrowing requirements. When applying for a mortgage, you will need to decide whether you want an interest only product or a repayment mortgage. With an interest only mortgage, you only need to pay the interest on the sum borrowed. However, at the end of the term, you will need to have the funds to pay back the actual debt and you will have to have a realistic method of doing so. With a repayment mortgage, the borrower pays back the capital as well as the interest, with the debt decreasing over the product's lifetime.
If you want to apply for a mortgage then it is important to realize that the bigger size of the deposit, the cheaper it will be to buy the house or flat of your dreams and the better your chances of being approved. The minimum deposit that most lenders will accept in the UK borrowing market is 5%. Therefore, if you are looking to purchase a house worth £100,000 then you will obviously need to put £5,000 of your own money towards the cost of buying your home. The remaining balance is referred to as the Loan to Value amount. So, if you wanted to buy a property worth £100,000 and you were able to make a payment of £15,000 towards the overall cost, you would need a mortgage with an 85% LTV ratio.
Mortgages with low LTV ratios are almost always cheaper than those with higher loan to values. This is because they are a much lower risk from the lender's prospective. Another advantage of taking out a product with a lower LTV ratio is the affordability factor. When you apply for a mortgage, you need to consider the fact that you will be paying back the interest over a long period of time. The less you borrow, the lower the interest repayments and the less you will have to pay back over the entire loan term.
You can use the following mortgage calculator to work out the cost of repayments based on the deposit value, the amount you need to borrow and the rate of interest.
If you would like to know how much you could borrow with a first time buyer mortgage, then you can use our simple calculator tool to find out now. Simply fill in the required fields below and the calculator will provide a quick estimation.
If you would like to discuss your borrowing options in depth with an experienced broker then please get in touch with one of our fully independent, FCA authorized and regulated advisors.
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