The prospect of buying your first home could be both daunting and confusing. Our aim is to guide you through the process from start to finish so that you understand exactly what the purchase entails and how much it will cost.
The mortgage market changes all the time, not just in terms of mortgage deals and regulation but also in the way lenders assess loan applications.
Some of the changes have been in the way mortgage lenders assess the suitability of all clients for the different types of loan on offer. They base this decision on a variety of factors, primarily:
- The property – type, condition, access and location
- Employment status – amount and frequency of income (and time in your current role)
- Financial commitments – current and future (and your history of managing credit).
There is now more focus on affordability and expenditure. This is very different to the traditional approach of simply multiplying your annual personal (or rental) income by a pre-set multiple to obtain a maximum lending amount.
We pride ourselves on being up to date with regulation, legislation and the economic market.
We understand your needs, match that to the requirements of lenders, and protect you and your dependants once you have bought your property.
This way, we help you save time and money in the new world of mortgage advice.
Getting on the ladder
There are actually some advantages to being a first time buyer. Interest rates are currently very low, and first time buyers are more appealing to sellers because they are not in a chain.
As we have access to many lenders we are well placed to assist you, however these days it is a necessity to provide a substantial deposit in order to get a mortgage (although there are a number of 95 per cent mortgage deals around), and you may be eligible for further assistance from the government.
Help to Buy: Equity Loan
First-time buyers in England can apply for a Help to Buy: Equity Loan to enable them to get onto the property ladder. This is a loan from the government that is put towards the cost of buying a newly built home. The scheme is only available to buy a new build home from a homebuilder that is registered for the scheme.
The government lends you between 5% and 20% (40% in London) of the cost of a new home, you add a 5% deposit, and borrow the other 75% from a lender. So for example, a £200,000 home will break down as:
- A deposit from you of £10,000
- A loan from the government of £40,000
- A mortgage from a lender of £150,000
The attraction of this scheme is that the government loan is interest-free for the first 5 years, although a £1 monthly management fee is charged. From year 6, monthly interest is charged on the loan, starting at 1.75% of the loan amount borrowed. This rate rises each year in April.
There are maximum property price caps on the property being bought using this scheme which depend on which region the property is in, ranging from £186,100 in the North East to £600,000 in London.
You must repay the equity loan when you pay off your repayment mortgage, sell your home or reach the end of your loan term, normally 25 years.
You cannot make monthly loan repayments but you can pay off all or part of the loan any time before then. The first part repayment will need to be at least 10% of what your home is worth at that time.
Contact us now and we'll be delighted to assist you.
