How much can i borrow?

The first thing you need to consider when buying a property is how much deposit you can afford to put down, how much you can borrow and which is the most suitable mortgage for your circumstances. You need to also have an idea of what other costs you will incur such as stamp duty, furniture, furnishings and professional fees.

To do this you will need to compare lenders’ mortgages yourself or seek a good mortgage broker or independent financial advisor who can select the right mortgage for you using their specialist market knowledge.

Whilst there are home builders who are purpose-building low cost properties aimed at first time buyers, it may be that when you have established how much you can borrow it is not enough or you feel you may be overstretched financially.

In that case you may have to consider some sort of co-ownership or co-financing – see below for more information on this.

A mortgage is a loan made by a mortgage lender to a property purchaser. A deposit is the complementary amount of cash put towards your first property. The property is paid for with a mortgage and usually a deposit too. Some lenders do not require a deposit to be put down by the purchaser and will lend 100% - or more – of the property value. Sometimes parents will help with the deposit. Yours may be able to help you, particularly if they are still working or have a very small mortgage in relation to the value of their property.

To find out which mortgage is right for you, you need to seek advice from a good mortgage broker or an independent financial advisor who specialises in mortgages. Some advisors charge for their services. The mortgages specialist will take into account what outgoings you have – including any outstanding loans or debts. The specialist will suggest to you or advise you on which might be the best option for you. Essentially the differences between the mortgages from the different lenders are the terms on which you can borrow, the terms on which you pay the money back and how much they will charge you for the privilege of being granted the loan. ‘An interest only mortgage’ is one where you have lower monthly payments but none of the actual loan is being paid off whereas a repayment mortgage means you are paying off the loan and the interest each month so you will own the property at the end of the repayment term. You must never forget that if you and any co-owner defaults on the mortgage payments, then the mortgage company has a right to repossess that property. Due to the difficulties facing first time buyers the mortgage industry has developed various different ways of making that first home affordable – though there may invariably be a slight premium for these.