What are the different types of mortgages available to first time buyers?
When it comes to finding the right mortgage for your first home, it’s not a case of one size fits all. So what kind of mortgages are there? And what kind of mortgage is right for a first time buyer? We asked our mortgage experts for their advice.
What mortgages does The Cumberland offer?
Fixed-rate:
Your payments can't change, they stay the same throughout the lifetime of the product.
Discounted, variable-rate:
This one follows our standard variable and has a discount offer for two years. Depending on what interest rates do your payments will vary on that basis. It doesn't follow Bank of England base rates, it is our standard variable rate, it isn't a tracker mortgage.
Is there one mortgage that is always better for first-time buyers?
Chloe Sorrenson, mortgage and protection advisor at The Cumberland, says: “There is no preferential first-time buyer product. It is down to us speaking to the individual. It's not one size fits all.
It depends on a customer’s circumstances and has a lot to do with their monthly budget. If you've got someone telling you they can only afford £500 a month and that is it, a variable is not right for them. It changes and they are not going to be able to afford it.
Which mortgage product is popular with first-time buyers?
Adam Todd, mortgage and protection advisor at The Cumberland, says: “The one that we offer quite a lot at The Cumberland is a mortgage where we give £1,000 cashback which helps first time buyers cover the cost of their legal fees which they have to pay when they buy the house.
That is a massive weight off their shoulders when you are having to think about the cost of doing everything. With the exception of that product, we offer exactly the same products to first-time buyers as we do home movers. They are no different.
“Fixed rates where you know what you are paying every month or discounted rates which tend to be a little bit cheaper but the interest rate can vary over the course of the product.”
If a first time buyer has done their homework and knows what they want, can they simply ask for that?
Adam says: “We don't offer non-advised appointments at The Cumberland. When you speak to a mortgage advisor we have to give advice. So if a customer comes in and says I want a £90,000 mortgage on a £100,000 house, we can't do a mortgage like that.
“I would ask a lot of questions to narrow down which mortgage is going to be good for them and I will make a recommendation.”
“We will help a customer through the process and make sure it's done right. For example, a customer will say ‘I want to pay my mortgage over 30 years because that's what my mum and dad did.’ Now mum and dad might be right. But every mortgage is individual to that person's circumstances.
“If mum and dad have got five car loans that add up to £2,000 a month then perhaps a 30-year term was better for them. If I've got a customer who's just got an income and no debt or financial outgoings then they could potentially afford to pay that mortgage back faster and save themselves paying The Cumberland interest. So that's where the recommendation of the advisor comes in. If you can afford to pay this mortgage back in 20 years you've just saved yourself paying interest for 10 years.”
Book an appointment with one of The Cumberland’s mortgage advisors to find out the best mortgage available for you as a first time buyer.