There are many things you can do to get yourself in the best position to get a mortgage.
For many, buying your first home is a real life goal and something to be extremely proud of (and rightly so!). However, with news headlines at the moment telling us how stagnant the property market is, if you’re thinking about embarking on the next chapter of your life and becoming a homeowner, then you’ll want to know whether now is a good time to buy your first home or not.
As interest rates are still considered low, this isn’t great news for savers, however borrowing money remains an attractive option. However, despite the borrowing rate being low, first time buyers, in many instances are still struggling to raise the deposit for a house, but there are many different schemes and incentives available to help you get on the property ladder.
The current Help to Buy Equity Loan ends in March 2021 with a new scheme starting on 1st April 2021. The new scheme will only be available to first time buyers and divides the nation into nine different regions (London, South East, East England, South West, East Midlands, West Midlands, Yorkshire and The Humber, North West, North East). Unlike the current scheme where the property price is capped at £600,000 despite where you live in the UK, the new scheme has different caps for different regions.
|Region||Up to March 2021||From April 2021|
|Yorkshire and the Humber||£600,000||£228,100|
|East of England||£600,000||£407,400|
If Bank of Mum and Dad were an actual lender, they’d be the tenth biggest mortgage lender in the UK*.(top 10 biggest mortgage lender) This statistic alone shows how popular this option is, and if you’re fortunate enough to have parents who are in a position to help gift you money for a deposit, this is great as it won’t go against you as a debt when your mortgage adviser carries out their affordability checks on you.
Some lenders have introduced a mortgage product called a ‘Springboard mortgage’ where a family member or perhaps a friend can put down a 10% deposit on your behalf which enables you to get a mortgage on the property. The savings that your family member or friend put down for your deposit can actually earn interest, which is a bonus for them.
Shared Ownership is where you buy a share of the property yourself and pay rent on the rest. You can gradually increase the amount you own (this is known as ‘staircasing’) and decrease the amount you rent.
Your friends or family members can opt to be your mortgage guarantor. They can use either their own savings, or their own property (if they own one), to offset against your mortgage. If you miss any repayments, your guarantor could risk losing their savings or their home.
With more lenders in the market now than there was 10 years ago, many banks and building societies are starting to acknowledge that their products need to be more inclusive in order to appeal to a wide range of customers. For instance, with a rising proportion of the working population now either self-employed or contracting, lenders have increasingly adapted and changed their underwriting and criteria to account for this sector of the economy, thereby allowing these previously underserved customers greater access to mortgage products. These changes are hugely positive as not only do they support more first time buyers, but they also help to increase buyer activity, keeping the market buoyant.
With interest rates remaining at ultra-low levels, this extends to 95% mortgages (typical first time buyer mortgage), and by way of example, 95% LTV mortgages are now starting at under 3%, making homeownership more achievable for those who might not be able to afford a big deposit.
So, if you’re considering becoming a homeowner and would like to benefit from the perks of owning your own home, the market is in good shape and as you can see, there is certainly a lot of help available to first time buyers who might want to take advantage of these low interest rates, while they last!
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.