House Purchasing Guide
Theres 2 types of purchaser in the UK.
- First Time Buyers (FTB)
- Purchaser (Who have been through the house buying process before)
FIRST TIME BUYERS
House prices in the UK are approximately 3 times higher than they were in the 1990's and as such the average loan to buy a house today as a first time buyer is approximately £118,000 according to ‘The Council of Mortgage Lenders' as at 12th February 2008. As a first time buyer the task ahead and the money required to get your first foot on the housing ladder can be very daunting. So what are the typical issues a first time buyer will face when entering the housing market today.
Deposits
Firstly, have you got a deposit to put down? 100% mortgages are becoming harder and harder to source, so having a deposit of 10% or more will make a big difference when securing your first mortgage and will help you get a much better interest rate and consequently lower monthly payments.
If you haven't got a deposit you may be able to approach your relatives for financial help. As the UK housing market has changed it has become more common for parents to help their children with deposits so they can a secure a mortgage on their first home.
Guarantors
If your relatives don't have the cash to help you find a deposit it maybe worth asking them to act as a guarantor on the mortgage. Effectively the guarantor is someone who agrees to be responsible for the repayment of a loan if the borrower cannot make the repayment.
Shared Ownership & Living with strangers
Having the resources to secure a mortgage to buy your first home can be tough. Another way around this problem is to pool your resources with other first time buyers. You can typically have up to four applicants on one mortgage which means your combined affordability will be taken into consideration by the lender, greatly enhancing your chances of securing that deal.
Shared Ownership Schemes
The way this scheme works is that you purchase a percentage of the property, for example between 25% and 50% from a public sector body or housing association.
Because you effectively own a percentage of the property with a third party, you will pay a mortgage on the bit your own through a traditional mortgage lender and will pay a rent for the bit you don't own to the public sector body or housing association.
Lenders will vet your affordability by taking into consideration the rent and the mortgage payments, but 100% mortgages can be gained meaning you don't have to find a deposit in order to secure the property.
One major disadvantage of a mortgage like this is that if the value of the property increase whilst you own your percentage you will not be fully rewarding by the total gains made. However you may be able to increase your share in the property over time. This practice is known as ‘staircasing'
PURCHASERS
Be aware that you may well be able to get access to similar deals to FTB's.
At North Mortgages our Mortgage Experts will take care of everything on your behalf. Remember, we source mortgages from the whole of the market, so you know your getting the best deals available and all tailored to suit your personal circumstances.
Call NOW on: 08000 949 595 or contact us today to arrange a Call Back.
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