Gleeson mortgage guide - what is a mortgage?
You’re looking for your first home and you’re hearing all kinds of new words and you’re not 100% sure what they mean… does that sound familiar?
Why don’t we get taught these type of things at school you might be wondering? Well here at Gleeson we understand first-time buyers, and that for them especially everything to do with buying a home is completely new; from mortgages to tenure, and covenants to searches, just some of the words that might not be in your vocabulary just yet!
As 86% of our customers are first-time buyers, we know the importance of helping every step of the way, helping turn what is somewhat of a complex process into a much easier experience for you, after all, buying your first home is one of the most exciting stages of your life.
So, we’ll start with mortgages. What is a mortgage, how do you get one and what do you need to have in place? Read on to find out.
A mortgage is a loan that you can use to buy a house. A mortgage is a necessity if you (like most people) can’t pay the full cost of a home up front. Essentially you take out a loan (mortgage) to purchase your home from a bank or a financial institution, which is known as a lender. Most loans run for 25 years or more, but the term can be shorter or longer based on how much money you are borrowing. The loan is then secured against the value of your home until it’s paid off, which is most commonly done in monthly mortgage repayments. If you don’t keep up with paying back your mortgage every month, the lender has the right to repossess your home and sell it to get the money back that they have lent you.
When you buy your home, to begin with you will need a deposit. If you’re a first-time buyer, it’s likely that you’ve spent the last couple of years saving this, or perhaps family have helped you out along the way. A deposit for a home generally is around 5% to 20% of the cost of the home you’d like to purchase.
There are many different mortgages and lenders to pick from, so choosing the right one for you can be tricky. It can depend on several things, such as the home you are buying, your income, your deposit amount and your credit history. When you are reserving your beautiful new Gleeson home we will ensure you are financially qualified by a mortgage advisor, and we have a great new build specialist company called Meridian Mortgages that we recommend. The mortgage advisor will be able to search the different lenders to get the right mortgage for you, with an appropriate affordable repayment figure per month tailored to suit you.
When your mortgage advisor assists you with applying for a mortgage, they will provide the lender with the things needed to assess your mortgage affordability, like proof of your annual salary and any other income you receive, as well as all of your outgoings, including credit card and loan debts, household bills, childcare, travel and general living costs. The lender will also check your credit history to see whether you are reliable with repayments, they will look at whether you have repaid things such as car finance, loans and even phone contracts on time.
Mortgage providers will usually have a maximum loan-to-value that they are prepared to lend you, this is the maximum amount you can borrow in relation to the value of the property you’ve chosen.
Your mortgage advisor will explain fully what house prices you can afford and will encourage you to not stretch yourself if you think you’ll struggle to keep up repayments. With the affordability of Gleeson homes, the lowest minimum household income to purchase could be around £12,000* per year, this is using another of helpful scheme called Home Reach part buy- part rent.
In summary, a mortgage is a type of loan you can use to buy a home. It’s an agreement between a lender (the financial institution / bank) and a borrower (you!).
Knowing some of the basic mortgage lingo ahead of time can help you understand exactly what you’re signing up for, but Gleeson and your mortgage advisor are here to help and will explain everything in as much detail as possible. That’s why we are the leading housebuilder for first time buyers like you.
