First Time Buyer Mortgage Interest Rates

publication date: Feb 21, 2011
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Mortgage Interest Rates in UK

First Time Buyer Mortgage Interest Rates

To find the best first time buyer mortgage for you, you need to work out if you want a repayment or interest only mortgage and then consider the type of interest that will be applied to your mortgage.

The interest rate that is applied to your first time buyer mortgage can make the difference between you being able to afford your mortgage or if interest rates go up and your mortgage rate goes up with it, then you might not be able to afford the mortgage and you might lose your home and have it repossessed.

So to find the best first time buyer mortgage for you, you need to get help from a mortgage broker or financial advisor to ensure you choose a mortgage with the right type of interest rate applied to it – for your personal circumstances.

  • Standard Variable Rate (SVR)
    This is the rate offered by lenders which is normally linked to the Bank of England base rate.

  • Fixed Interest Rate
    This where the rate is fixed for a period of time, irrespective of what happens to the Bank of England base rate.

  • Capped Interest Rate
    This is typically a standard rate, for example 5% that has a cap on it. So if the Bank of England base rate increases, your rate will only increase as high as the capped rate.

  • Discounted Rate
    This is where the rate is the lenders’ SVR – a discount, eg 1 or 2%. So their rate might be 5%, but with a discount for a year or so of 2%, the rate you pay is therefore 5% - 2% = 3%.

  • Base Rate Tracker
    This rate is typically linked to the Bank of England base rate. When it goes up, the rate of interest you pay on your mortgage goes up and vice versa.

Choosing the best first time buyer mortgage for you is a complicated process and not one that you can rely on the internet for. Mortgages via the internet are helpful from a research perspective, but getting a mortgage and buying a home will affect the insurance, your Will and all of your future finances, so it is vital to get help from a mortgage broker or independent financial advisor.


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