Mortgage Advice for First Time Buyers

Posted October 27, 2020 by in Lifestyle

If you are buying a home for the first time or you are in the early stages of homeownership, it makes sense to review your situation every so often to make sure you are on the best rate for your purposes.

In this post, we will look at your options, giving you an overview of fixed and variable mortgages, and offer you some excellent early payoff advice:

advice for first time homy buyers

What is a Fixed Rate Mortgage?

A fixed-rate mortgage loan is a home loan from a mortgage lender where the interest rate you pay on the principal amount is fixed at a certain rate for a period. Usually around three or five years. This means that if the housing market changes in that time and the interest rates rise, you will not pay any extra. 

Fixed-rate mortgages are an excellent idea for first-time buyers. They offer stability and reassurance in the early days, allow you to get your first taste of borrowing, and let you plan your financial future.

The downside is that if interest rates fall, you will not make any savings. Furthermore, fixed rates don’t let you contribute extra to the principal amount. 

What is a Variable Rate Mortgage?

Variable-rate mortgages are mortgage loans that vary with changes to the interest rate. When the interest rate goes up, you pay more on your monthly premium. When it goes down, you pay less. Apart from the potential to save when the interest rate goes down, variable rates also allow you to make extra mortgage contributions – fixed rates don’t. 

If you are the sort of person who doesn’t mind sacrificing security for potential savings, then a variable or split rate could be the better option. There is also the choice of moving between fixed and variable rates and different times in your mortgage lifetime. Bear in mind that if you do this, you will be subject to different rates and charges. 

What is a Split Loan?

Somewhere in between fixed and variable rates is the split rate mortgage. The fixed-rate mortgage allows you to separate your loan into separate arrangements. Half the loan will be on a fixed interest rate without variation; the other half will be on a variable rate that changes and where contributions can be made. 

The split loan mortgage is an excellent choice for those who aren’t sure about committing to one or the other; learn more here. It offers you a nice balance of security and flexibility. This, along with the fixed-rate, are excellent choices for first-time homebuyers

Early Payoff Advice

Most first time buyers dream of paying their mortgage off early and enjoying their retirement. It might seem like a fanciful idea, but it can be a reality with some discipline. Choose a split or variable rate. Whenever the interest rate is low, and you make a saving reinvest those savings in the loan to pay off the principal amount faster.

You might also increase your regular monthly payment by rounding it up; that way, it doesn’t feel like paying extra. 


Have you ever bought a house? If you have any advice for first-time home buyers, share in the comments below!