Mortgage Loan Comparison for First-Time Buyers

he credit crunch has had an adverse effect of the willingness of banks and financial institutions to lend to first-time buyers. Over the past few years, lenders have been seeking bigger deposits and flawless credit scores, making it difficult for many first-time buyers to qualify for a mortgage. However, the situation appears to be improving, according to figures published by the Council of Mortgage Lenders (CML) in July 2013. The statistics for May 2013 show that lending to first-time buyers reached a six-year high. During the month, 25,100 loans were issued to first-time buyers, up 29% on the figures for April 2013 and a massive 42% increase compared with May 2012. However, it can still be difficult for first-time buyers to secure good deals in the current climate. Our mortgage loan comparison for first-time buyers will help to guide you in the right direction.


Long-established, London-based lender HSBC was the winner of the Supers award for Best Mortgage Provider in 2012. It is offering a discounted variable rate that could be attractive for first-time buyers. During the discount period, the interest rate for this product is 3.39%, rising to 3.94% at the end of two years. The bank expects borrowers to have a 10% deposit. The mortgage allows borrowers to make overpayments, meaning that they can make additional payments and pay off their loan earlier if their finances allow. Borrowers will have to pay an arrangement fee of £999.

Furness Building Society:

Winner of the Mortgage Finance Gazettes Best Regional Building Society in 2013, Furness Building Society has a discounted variable mortgage that may suit first-time buyers. The initial rate of 3.45% will apply for the first three years. Borrowers will then go on to the building societys standard variable rate, currently 5.44%. Borrowers must have a 10% deposit. An arrangement fee of £995 needs to be paid for this product.


If you only have a 5% deposit, you may be interested in Nationwides Save To Buy scheme. Provided you have held a Save To Buy account with the Nationwide for a minimum of six months, you could qualify for a 95% mortgage. Depending on the level of savings in your account at the time you purchase your new home, you could earn up to £1,000 cash back.

First Direct:

A division of HSBC, First Direct is a bank that focuses on doing business online. It currently has a limited edition lifetime tracker mortgage available that offers borrowers a low initial rate of 3.99%. A lifetime tracker avoids the situation where your monthly mortgage payments suddenly increase at the end of the special rate. Borrowers will need to have a 10% deposit and pay and arrangement fee of £999 to access this mortgage.

Should You Use A Broker?

Mortgage deals change all the time. Old rates are withdrawn and new rates are introduced on a regular basis. It is, therefore, extremely important to check the market before committing to a particular lender. Checking all the available offers can be time-consuming. Rather than carrying out all the legwork yourself, you can use a broker to scan the market on your behalf. Some brokers offer their services to borrowers for free. They are paid a fee by the lender when they successfully match them with a customer. You have the right to ask about the amount of commission a broker will receive. Other brokers charge a one-off, up-front fee, usually around £400 to £500, to scan the market on your behalf for the best deals around.

If you are using a broker, you should be aware that there are some lenders who will only deal direct with customers. Deals from these lenders will not be included in the feedback you receive from your broker. Tesco Bank, the Post Office, First Direct, HSBC and ING Direct do not deal with brokers. In addition, neither Britannia nor the Yorkshire Building Society pay fees to brokers. While this should not exclude them from the results of fee-based brokers, it is worth bearing in mind. To include these lenders, it is worth carrying out your own mortgage loan comparison exercise for these companies and comparing your results to those produced by your broker.

Sam, the auhtor has been trying to compare mortgages to see if he’s in the right position to buy a house.

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