With a wide range of product choices and a requirement to meet the strict borrowing criteria, the mortgage process can be confusing for First-time buyers – so it makes sense to take advice.
To own your own home remains a desire of many who are currently renting, or living at home. If you (or your children) find yourself in this situation, then you can take comfort from the continued support that exists.
The government, for example, wants to get more people onto the property ladder through initiatives such as the Help-to-buy scheme. It’s also keen to encourage new housebuilding – for which the first-time buyer is a key audience. In fact, in 2018, house builders applied for permission to build 370,000 new homes, double the number from a decade earlier.
Providing a deposit is a key stumbling block for many, but in this respect there’s much improved lender support with products that only require a 5% deposit. Going back a decade, there were just three mortgage lenders who offered a product with a 5% deposit. By April 2019, there were 60 providers to choose from!
As for the deal rates, whilst they will not be as attractive as those where as much larger deposit is provided, there were sizeable year-on-year drops in April for the average two and five-year fixed rate deals, coming out at 3.28% and 3.72%, respectively.
Additionally, if you have just a 5% deposit, you could consider the Help-to-Buy scheme for new-build properties, where the government would loan an extra percentage enabling you to access the better Loan-to-Value (LTV) deals on offer.
As the average LTV figure for first-time buyers sits at around 76% (comparable to a 24% deposit) many have already taken advantage of this scheme, benefitted from the Bank of Mum & Dad, or simply saved for a larger deposit.
House price growth (or decline) will vary wherever you are in the UK, but in general, growth is slowing. Starling house prices, combined with relatively cheap borrowing, and lower deposit requirements, may usher in a period of opportunity for those looking to make their first property purchase.
Additionally, don’t forget that the first-time buyer is also a very attractive proposition for sellers, as there’s no property chain behind them, creating one less hurdle in the home buying process.
It’s vital that you take professional advice. We would help navigate you through the affordability, evidencing of income and credit rating hoops, and in the process hopefully identify some of the decent deals that are still on offer – whether it’s a 95% LTV package, or moving towards the 60%+ LTV deals, where the interest rate reduces to reflect the larger deposit contribution.
This may not have been an issue for you previously, but it’s an important factor when seeking a mortgage loan.
The role of a credit score is to try to predict your future behaviour, which means that people who have a poor score may suffer.
We can talk through the steps you could take to help improve your rating, and to make yourself more appealing to the lenders.
Surprisingly though, rental payment history (particularly for those not in social housing) isn’t necessarily reflected in people’s credit reports. However, there now seems to be a greater enthusiasm from the credit agencies and from those that use their service to include this information. This is likely to benefit some first-time buyers.
Read our tips on how to improve your credit rating here.
For a better understanding of the whole home buying process, take a look at our 12 steps infographic.
Your home may be repossessed if you do not keep up repayments on your mortgage. The content of this blog is for general information only and should not be considered advice.
Please talk to us to see if we can help you (or a family member) step onto the property-owning ladder. Get in touch with us on 01609 760960. Or arrange a call back and one of our mortgage brokers will be happy to help.
Reference – BL089 – Jan – 20