Mortgage Mistakes Common Among First Time Buyers.



Posted on: 23rd March 2015

Whether you view the process of buying your first home as something that’s uniquely exciting or bewilderingly terrifying, chances are you’ll run into one or two hiccups along the way.

Mortgages are such complicated beasts that even those now in the process of buying their eighth home can’t wholly expect a smooth ride from beginning to end, so what chance do plucky first-timers have?

Luckily, most of these errors are minor in nature and of no real consequence so a slight delay or headache is the worst you can expect. But in other cases however, what appears to be a slight oversight on the surface could have serious ramifications on the overall purchase process as a whole and perhaps influence the final outcome in a critical way.

Here’s a quick look at five key examples of the kinds of first-time buyer mortgage mistakes to steer clear of at all costs:

1 – Assuming All Earnings Are Taken Into Account.

It’s common to assume that your chosen lender will make their decision in accordance with every penny you earn, but this isn’t the case at all. Instead, banks prefer to cover their own backs by way of considering your case at its basic bottom line. As such, things like bonuses, overtime, and certain additional sources of income will not be factored into the decision made.

2 – Not Considering Higher Deposits.

Low-deposit mortgages and even those with no deposit to pay at all are all the rage these days, though will always come at a cost, and quite a big one. Pay no deposit in the first instance and you’ll be looking at a much more expensive overall deal in most cases, where interest rates or the overall balance due will spike significantly. Getting hold of a larger deposit isn’t always possible, but where it is, you should at least consider it.

3 – Overlooking Hidden Fees And Charges.

So you’ve saved the deposit and worked out that you can afford the monthly payments, which means you’re all set to go, right? Wrong. Sadly, there are things like search fees, survey fees, valuation charges, mortgage arrangement and booking fees, stamp duty, and legal fees to take into account that aren’t covered by your mortgage or your deposit. And if you can’t pay for these, you technically can’t buy.

4 – Falling For Dodgy Deals.

There will always be those brilliant first-time buyer deals offered by major banks and lenders that are worth their weight in gold, but don’t fall into the trap of assuming all are of the same calibre. In some cases these deals involve low deposits and the fairest terms to help newcomers get on the property ladder – in others, however, they’re simply there to capitalise on the lack of options available to buyers with tight budgets.

5 – Rushing Into A Deal.

Last but not least, as a first-time buyer it can be incredibly tempting to just dive straight for the first lender that actually says ‘yes’ to you, but in doing so you could find yourself locked into a deal that’s not even close to the best deal you could have taken home.