New home mortgage
As first-time buyers, we understand that purchasing a property may seem daunting and unattainable. Therefore, we have simplified the initial stages and provided information on what you should do and the assistance available to help you purchase your first home.
Buying a property may seem challenging, but purchasing your new home and being able to customise it is worth it. However, before making a purchase, there are many factors to consider, such as: 
- New Home Mortgage: One of the most crucial aspects is securing a New Home Mortgage when embarking on the journey to homeownership. This financial tool enables you to spread the cost of your home over time, making it more affordable. To find the best New Home Mortgage for your situation, comparing mortgage rates from different lenders is essential. The required deposit is another critical element in the home-buying process. The amount you need as a deposit can vary, but saving for it is essential in realising your homeownership dreams.
- Mortgage Rates: Mortgage rates play a significant role in determining the overall cost of your new home. Research and understand the current market rates and their effects on your monthly payments. Securing a favourable mortgage rate can save you a substantial amount of money over the life of your loan.
- Eligibility for a Mortgage: To secure a New Home Mortgage, you must meet specific eligibility criteria. When determining your eligibility, lenders consider your credit score, income, and employment history. It’s essential to assess your financial situation and improve your eligibility.
Finding a mortgage adviser who can help you facilitate the process is essential to that endeavour. They can assist with everything from arranging for a DIP, which you can provide to the estate agents/builder as proof that you are serious about purchasing the property. A mortgage adviser can also guide you through the application process, helping you navigate the complexities of securing a mortgage for your new home.
What is a DIP?
A Decision in Principle (DIP), also known as an Agreement in Principle, a Mortgage in Principle, or a Mortgage Promise, is an initial indication from your mortgage lender regarding how much they might be willing to lend you for your New Home Mortgage. It’s an essential step in home-buying as it provides valuable information to prepare for your house hunt.
It’s important to emphasise that a DIP is not a legally binding agreement, and the actual mortgage amount may vary after thoroughly evaluating your New Home Mortgage application. However, obtaining a DIP typically involves a soft credit check, which will help your credit rating.
The benefits of obtaining a DIP are significant for your New Home Mortgage. It gives you a clear understanding of your budget, allowing you to search for homes within your financial means. Additionally, having a DIP lets you demonstrate to estate agents/builders that you are a severe and committed buyer for your New Home Mortgage. This can give you an advantage in a competitive housing market, as sellers often prefer to work with buyers who have already taken steps to secure mortgage financing.
Get in touch with a conveyancer!
When you embark on the journey to purchase a new home, the process can differ significantly from buying an older property, especially regarding how things move. Securing a New Home Mortgage that aligns with your financial goals and preferences is critical in this process.
Buying an older property and accepting your offer usually takes several months to exchange contracts. However, for new builds, the process is notably faster, and you can often expect to exchange contracts within a month of reserving the property. The completion date will depend on whether you’re buying off-plan or not.
New Home Mortgage providers understand the unique dynamics of new build purchases, which can often lead to more streamlined approval processes and faster financing arrangements. This speed can be a considerable advantage when dealing with new builds. 
Choosing a conveyancer or solicitor before reserving a property is not only a good idea but often necessary. This professional will handle essential legal matters like property searches, ensuring the property has proper planning permission and confirming access to roads and sewers. Therefore, it is highly recommended to select one even before you reserve your new home.
The developer of the newly built property may suggest that you choose a solicitor or conveyancer from their approved panel. While this is not mandatory, opting for a solicitor already familiar with the developer and their paperwork can significantly accelerate the buying procedure. They may have established processes and relationships that can expedite the legal aspects of the transaction.
When you’re in the market for a new home, securing a suitable New Home Mortgage is a crucial step in the process. Additionally, understanding the faster pace of new build transactions and the importance of early engagement with a conveyancer or solicitor can help ensure a smoother and more efficient home-buying experience.
Save a big enough deposit to get the best rates.
When considering purchasing a new home, securing a suitable New Home Mortgage is a pivotal step in the process. While a 5% deposit is the minimum requirement for many mortgages, it’s advisable to consider putting down a more substantial amount if you have the financial capacity to do so. A larger deposit can have several significant advantages.
Firstly, a larger deposit can significantly expand your options regarding New Home Mortgage products. Lenders often offer more favourable terms and lower interest rates to borrowers who can provide a substantial down payment. This means that increasing your deposit opens the door to a broader range of mortgage products, some of which may be more tailored to your specific needs and financial situation.
Secondly, a larger deposit can increase your chances of securing lower mortgage rates. Mortgage lenders view borrowers with larger deposits as lower-risk candidates, as they have a more significant stake in the property. Consequently, they may be more inclined to offer you more competitive interest rates. This can lead to substantial savings over the life of your mortgage, making homeownership more affordable in the long run.
Moreover, a larger deposit can also positively impact your overall mortgage affordability. With a smaller loan-to-value ratio (LTV), the ratio of the mortgage amount to the property’s value and your monthly mortgage payments may be lower. This can free up your monthly budget for other expenses or savings.
Mortgage advice on mortgage type, mortgage term and new mortgage products
When delving into securing a New Home Mortgage, it’s not just about the mortgage rate that should occupy your attention. There are several other critical factors to consider, each of which plays a crucial role in tailoring your mortgage to your unique needs and financial situation.
One of the fundamental decisions you’ll need to make is opting for a fixed or variable mortgage. Fixed-rate mortgages provide stability as your interest rate remains constant for a predetermined period, making budgeting more predictable. In contrast, variable-rate mortgages can offer flexibility as they track market interest rates, potentially resulting in lower initial payments. However, they come with the risk of interest rate fluctuations. 
Moreover, the mortgage term is another vital aspect to contemplate. While the typical mortgage term is 25 years, it’s worth noting that some borrowers choose extended terms, such as 35 years. This can make monthly repayments more manageable, but it’s essential to consider the long-term costs and implications of a longer mortgage term.
Now, let’s talk about the role of mortgage brokers in navigating this complex landscape of New Home Mortgages. These experts can be invaluable assets in your quest for the right mortgage. They are well-versed in the ever-evolving mortgage market. They can inform you about innovative mortgage products, such as Deposit Unlock or Green mortgages, and help you understand their advantages and disadvantages.
Working with a mortgage broker means you can tap into their experience and knowledge to find the most suitable mortgage for your unique situation while striving to secure it at the most affordable rate possible. They provide valuable guidance, mainly if you are new to the mortgage market, helping you explore different options and choose the one that aligns best with your financial goals.
Shared ownership could be an option.
To make purchasing your first home easier, consider a shared ownership scheme, a viable alternative to a traditional New Home Mortgage. Housing associations and private developers often offer these schemes, allowing you to buy a portion of the property and pay rent on the remaining share. It’s a fantastic way to climb the property ladder, especially if you’re concerned about affordability.
With shared ownership, you can start with a more manageable initial investment, which can be particularly advantageous for first-time buyers. As your financial situation improves, you can buy more property shares when the funds are available, gradually increasing your ownership stake.
It’s important to note that properties under shared ownership are typically leasehold, which means you must pay a monthly service charge and contribute to significant maintenance works. This ensures that the communal areas and shared aspects of the property are well-maintained, but it’s an additional cost to consider for a new home mortgage.
Furthermore, while shared ownership provides a flexible path to homeownership, purchasing additional shares can be quite challenging, and the process may come with its complexities. Therefore, it is advisable to fully comprehend the entire process and associated costs before engaging in a shared ownership scheme. This includes understanding the terms of your lease, the responsibilities of both the homeowner and the housing association or developer, and any potential future restrictions on selling your share.
Budget for additional fees and costs
It’s important to remember that there are additional expenses beyond the deposit and mortgage when purchasing a New Home Mortgage. To be prepared, make sure to budget for these extra costs. Some other fees to keep in mind include the following:
- Conveyancing fees
- Mortgage valuation fees
- Arrangement fees
- Stamp Duty on properties over £300,000 (under this price is free for first-time buyers)
- Survey of the new property
- Removal costs
- Fixtures and fittings costs
- Home Insurance
Creating a written list or a spreadsheet for your budget can help ensure that you stay caught up on covering essential costs.
Types of new home mortgage
A range of options is excellent for managing your finances; luckily, various types of mortgages are available.
- Repayment: You repay the amount you borrowed, with interest, over a set term
- Interest only: You only pay back the interest on your loan each month, then pay the total amount you borrowed at the end of the term.
Repayment mortgage types
Repayment mortgage types are a great way to pay off your mortgage quickly. Depending on your financial goals, timelines and budget, you can choose from the following repayment types;
- Tracker: The amount of interest you will pay monthly is subject to change based on the Bank of England’s base rate.
- Offset: You will be charged interest on the borrowed amount, but any money in a linked savings account will be deducted before calculating the interest.
- Fixed-rate: Your monthly interest rate will remain constant for a fixed period that has been agreed upon.
Looking beyond your initial doubts when purchasing a new home is essential. Often, what may seem unattainable at first glance can become a reality when you explore your options. One avenue worth exploring is working with a mortgage broker who can provide you with insights and advice that might pleasantly surprise you when the time or circumstances are right. 
As a first-time home buyer, the expertise of a mortgage broker can be invaluable in navigating what may initially appear to be a complex process. They serve as a valuable resource, shedding light on the different types of mortgages available and helping you select the best product to suit your needs and financial situation.
Mortgage brokers bring a wealth of knowledge, skills, and experience that can make a significant difference in your journey to secure a New Home Mortgage. They have access to the latest information and market trends, allowing them to offer you the most up-to-date advice and guidance. Their expertise can open doors and opportunities you might not have considered possible.
When purchasing your new home, always appreciate the benefits of working with a mortgage broker. They can be the key to turning your homeownership aspirations into a reality, providing you with the guidance and support needed to navigate the complexities of the mortgage market with confidence.
