First time buyer mortgages in the UK

That said, a little personal knowledge is also advisable. The following information will help you familiarise yourself with some of the key elements involved in taking out a first mortgage.

Repayment v Interest Only mortgage
This relates to how you plan to repay the capital that you have borrowed. There are two basic options: you can repay the money gradually over a number of years (typically 25). This method is commonly known as a Capital & Interest, or Repayment Mortgage. Alternatively you can pay the mortgage lender the interest only each month and then repay the money borrowed in one lump sum at the end of the mortgage. There are a number of ways to do this and you should understand the risks associated if you are considering an interest only mortgage.

Fixed or Variable monthly mortgage payments
There are a huge number of mortgages available in the UK, but they fall basically into one of two categories: those where your monthly payment varies (discount mortgage rates or tracker mortgage rates) and those where it can’t (fixed mortgage rates). The decision is a personal one and will depend upon your priorities and your financial ability to cope with fluctuating mortgage statements.

Higher Lending Charge (HLC)
Formerly called MIG (Mortgage Indemnity Guarantee) the Higher Lending Charge is an insurance policy paid for by the borrower in order to protect the mortgage lender. It is typically paid to the lender by the borrower if the loan to value (LTV) is above 90%, which is often the case for the first time buyer who tends to not have a large deposit to put down. Not all mortgage lenders apply the charge, and it often makes sense to avoid it. Seek advice if in doubt.

Consult a mortgage expert
This online information is here to offer you a basic grounding in mortgages and should not be substituted for financial advice. Your circumstances will be very different from the next person, thus it is highly recommended that you consult a mortgage expert for expert advice tailored to suit your needs.

See also:
First time buyer mortgages
Best buy mortgages
How much can I borrow? mortgage calculator
What will my monthly payments be? mortgage calculator

Useful link: http://www.communities.gov.uk/
Communities and local Government
Created in May 2006, this Government department is responsible for housing, urban regeneration, planning and local government.