So you’ve finally decided to purchase your very first home. This is often an exciting – and nerve wracking – milestone because aside from the home itself, you need to decide on a proper mortgage deal. There are just so many out there that it can be overwhelming, with most simply looking to strike a deal with the lowest rates. Unfortunately, purchasing a mortgage for a first time home isn’t that simple, and it could lead to regrets down the line. So, what is the best mortgage for a first time buyer?
While there is no one size that fits all, there are a few things to keep in mind while applying for your first mortgage. Below are a few easy mortgage tips for first time buyers to take to heart when you’re looking for the right kind of mortgage for your first home!
Taking risks isn’t necessarily a bad idea
Many first-time buyers decide on a mortgage plan with a five year fixed rate; and for very good reason. Normally these rates aren’t affected by the fluctuations in the marketplace, which means the interest rate will be low-risk in comparison to shorter timetables. However, while this is definitely the smart choice for those who don’t want to take any risks, there is a chance to save on money by going for variable rates.
For example, if you’re confident with the stability of your earnings and your ability to save each month, shorter fixed rates and even variable rates can help save you a tidy sum. While the risk is generally higher with the possibility of a spike in price (however unlikely), the chances of earning more than a five year fixed rate is quite high.
Tips for those who decide on shorter timetables
For those considering variable rates, be prepared for your payments to fluctuate as interest rates change, so it’s important to choose one that aligns with your budget flexibility. Another great tip would be to make use of hybrid rates – which is about a half fixed and half variable rate. That way, you’ll be able to benefit from a lower-rate environment, while staying prepared for the possibility of higher payments if rates increase.
Your home may be repossessed if you do not keep up repayments on your mortgage.
