First Mortgage

Written by Jeremy Horelick
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Successfully landing your first mortgage can be a cause for celebration. After years of throwing your money away on rentals, you can finally lay claim to a property that is distinctly yours. Never mind that it really belongs to the bank or some other lending institution. In theory, the home is yours, which means any appreciation in its value is also yours.

But finding that first mortgage can be a struggle, particularly if your credit is less than perfect or you're a first-time homebuyer (or, in many cases, both). Fortunately, among the several thousand different mortgages available in the UK, several are designed expressly for first-timers. After all, when people own their own homes, everybody benefits, including the economy at large. Hence, the government makes it lucrative for lenders to extend their credit lines to those who might have tarnished histories.

Getting Your First Mortgage

The amount that you'll qualify to borrow for your first mortgage loan depends on a couple of factors. Chief among these is your income (in proportion to your other outstanding debt). Here the multiples vary depending on your status. Single borrowers tend to qualify for 3.25 times their salary, while couples can add a multiple of one times their second salary. In other instances, couples can qualify for 2.5 times their combined salary, which is usually the most attractive option.

Additionally, you have to factor in the amount of your deposit. Some lenders require as much as 20 percent down, while others offer competitive rates with no money down--you just have to be sure to read the fine print on such deals, as many require extensive documentation and other lender safeguards. Some buyers even choose 100% mortgages in instances where they have no money down for a deposit. Most mortgage lenders will only agree to 90 percent of your home's cost and require the other 10 percent as a deposit, so 100% mortgages can be an especially enticing offer.

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