Non Standard Mortgages - First Time Buyer
Mortgages Designed For First Time Buyers
Britain is a nation that has become fixated with house
prices and given the coverage that the subject receives,
it is difficult to be blind to the financial benefit that
the steady or surging long term gains of property ownership
brings. It's unsurprising then that young professionals
are so keen to get started on the housing ladder.
However, thanks largely to the rising house prices that
make home ownership so appealing, many first time buyers
simply can't afford to get together a deposit of a sufficient
size to meet the loan to value requirements on most mortgages.
First time buyer mortgages can be divided into two types:
Historically first time buyers were offered better deals
than existing homeowners or people looking to remortgage.
This used to be done through the use of deals that were
exclusive to first time buyers, but these days it is rare
to find deals that are not open to all types of borrower.
All types of mortgage sometimes come with incentives or
features that hold particular appeal to first time buyers.
These can include: cashback on completion (ranging from
a few hundred to several thousand pounds), a refund of the
property valuation fees, help with legal costs and so on.
With new build properties, it is sometimes possible to get
additional incentives such as free kitchen appliances or
deals that allow you to move in to a fully equipped property
for a set sum of money as a deposit.
Within the bounds of standard mainstream mortgages, many
first time buyers go for fixed or capped rate mortgages.
This is often a sensible choice as it allows borrowers to
rigidly set their budget at a time when spare income may
not be freely available to cope with increases in interest
rates that may otherwise affect their mortgage payments,
if they had a discounted rate for instance.
First time buyers should be aware that to get the best
deals in terms of interest rates, the bigger the deposit
the more competitive the rate. If possible, it is usually
best to try and aim for at least ten percent. But this fact
leaves many potential borrowers facing a dilemma of whether
to delay the purchase and save a larger deposit or to take
on a mortgage loan with a marginally higher interest rate.
While saving can be good preparation for the financial rigidity
that is required in making your mortgage payments each and
every month, delaying the purchase often means you have
to pay a higher asking price as the markets are likely to
have risen by the time you get round to buying.
A final point that first time buyers should remember is
that while the normal threshold for paying stamp duty is
£60,000, under the last budget stamp duty has been abolished
on properties that are sold for less than £150,000 in around
2,000 of the most deprived areas in the UK. Some of these
regeneration zones are actually quite popular with first
time buyers anyway, so this can be an added incentive to
target those locations.
