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Mortgage Guide

First time Buyers Guide
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Possible Solutions Help and Ideas for First Time Buyers

For those not already on the property ladder the outlook can be daunting.

All kinds of surveys suggest that that first property is all but out of reach for first-time buyers in many parts of the UK.

However there are many positive steps that the potential first-timer can take to buy their first home.

Group Mortgages and Shared Ownership

Taking a Lodger / Renting out a Room

General Solutions

Mortgage Help from The Government

Deposits for First Time Buyers

Ask The Family

Look Further Afield / Move

Use the Power of Knowledge

Graduate And Professional Mortgages

Specific affordibility solutions

If you have affordibility problems, the immediate solutions might be:

Try to get a 100 per cent mortgage – many lenders offer these to first time buyers.

They are normally repayment type mortgages

If you have a deposit, but can't afford large monthly payments, another possible solution might be to get an interest-only mortgage. This is a mortgage type where the monthly payments only pay off the interest, and you don't make any payment towards the capital sum .

Get a longer mortgage: Choose a mortgage term longer than 25 years – it may seem daunting but many lenders will offer mortgages with terms up to 40 years. This may help you afford the lower monthly mortgage payments that will result. The hope is that the property prices will keep rising so when you come to sell you will be able to pay off this longer tern loan. While, historically, property does rise over time, it is not guaranteed.

Some lenders will offer increased income multiples – in other words up to 4 or 5 times your income.

Some lenders even have schemes where you can borrow more than the value of the property. Find a mortgage broker who will help you locate these.

Look out for other special deals aimed at the first-time buyer. These might include lower deposits, better terms or family guarantor mortgage options.

Some lenders offer special fixed-rate mortgages for first-timers with low deposits (but remember that if the interest rate goes down you could be left paying more).



Next solution for first time buyers...

Group Mortgages and Shared Ownership

This is a growing trend. A recent survey has shown that around 57% of first-time buyers would consider buying a property with friends.

Over the last few years more and more high street lenders have started to offer these which enable up to four people to pool their income and jointly purchase a property.

Read more about Group Mortgages and Shared Ownership in the UK



Next solution for first time buyers...

General Solutions

Increase your knowledge Gather together as much information about mortgages and home buying as possible. OK you're already doing that by reading this. But keep on doing it. It really will help.

If you're not finding it easy to get a mortgage then your persistence and information gathering is what will make the difference.

Research property prices. Don’t rely on rumour and hearsay. Find the lowest and highest average prices for the kind of property that you’re after.

Research mortgages. Don’t take the first deal you come across. There are many kinds of mortgage, some aimed specifically at first time buyers. Check them out and list the pros and cons before making a decision.

Negotiate: while it's important that you don't underestimate the price of properties of the type and in the area you want - nor overestimate what you can afford - bear in mind that there may be a lot more flexibility in the prices quoted than you think.

At the time of writing asking prices are being undercut by 20% or less. That's £30,000 on a £150,000 flat. See Making an Offer .

Try the DIY type sellers who are selling their own properties. They may be more realistic than Estate Agents

Be realistic from the beginning and you’re more likely to find a deal that suits you.

Next solution for first time buyers...

Mortgage Help from The Government

The government has expressed its commitment to make first time buying easier. Currently there are three schemes. Keep an eye on these and find out if anything is happening in your area.

Shared ownership. The government initiative would share the mortgage between buyer, government and lender. The details are still to be worked out but this could provide an affordable route to your first home.

Affordable housing. The government is buying up land and exploring ways of reducing the cost of building new housing so that it can provide affordable homes.

Tax incentives. The government has plans to increase the stamp duty threshold so that lower price properties aren’t affected.

Key workers. There are a number of schemes that make first-time buying easier for key workers (health workers, teachers).

The major new government initiative to assist for cash-strapped UK first-time buyers and Key Workers comes under the name Home Buy. Click to read more

Next solution for first time buyers...

Get a Deposit

Generally speaking, the bigger the deposit you can put down, the better the mortgage deal you can get – and that means lower repayments. It is possible to borrow 100 per cent – or more – of your property’s valuation, but this won’t be cheap.

The higher your loan to value (LTV), the greater the interest rate you’re likely to face.

If you need an LTV of more than 90 per cent, your lender may add a higher lending charge (HLC).

This can also be called a mortgage indemnity guarantee (MIG), additional security fee or mortgage advance premium.

For someone borrowing £100,000, this will typically be in the region of £1,500.

For more information, see Higher lending fees explained.

Next solution for first time buyers...

Ask The Family

Many mortgage lenders will allow your parents to act as guarantor for your mortgage.

Or you might borrow the deposit from your parents.

Recently some innovative schemes have come onto the market allowing you to offset parental income or savings against the loan. Read more about family guarantor mortgages.

Next solution for first time buyers...

Look Further Afield / Move

If you can move around there are still bargains to be had away from the traditional property hotspots in the south and the inner cities.

Look at less salubrious areas or less popular regions.

Remember that once you get a foot on the ladder moving on becomes much easier.

Look at the section on Finding Your Property particluarly Don't overpay for an expensive address

Next solution for first time buyers...

The Power of Your Knowledge

Whether you decide to buy alone, with a partner or one or more friends…

(For more on this, see Group mortgages and shared ownership.)

The more information you gather about the house buying process and mortgages in particular, the further you’ll be able to make your money go.

You’ve made a great start by reading this, but keep it up.

Working your way though the links on this site, will give you:

• The knowledge to build a realistic picture of what you can afford,

• The information to track down the best possible mortgage deal for your needs, and…

• A clear understanding of the ins and outs of the purchase process, so you can keep the costs – and the stress – to a minimum.

You should also keep an eye on the newspaper property pages and read up on your chosen area.

The better informed you are, the more confident you’ll feel about negotiating with lenders and sellers to get what you want.

That’s why it’s vital to go through every single piece of paper from your mortgage adviser, lender, surveyor and solicitor with a fine-tooth comb.

And don’t skip the small print – that’s where the surprises lurk.

It might seem tedious, but when everything’s done and dusted and you’re installed in your new home, with your finances and sanity intact, you’ll be glad you did it.



Graduate And Professional Mortgages

These are mortgages aimed specifically at Graduates and professionals (including teachers, lawyers, doctors) offering better conditions than standard loans.



So, while it is tough out there at the bottom of the property market, it’s not impossible.

Explore all the options and you may find it easier to get that first mortgage that you thought. And remember, the market is always changing.

Interest rates, government schemes, regional values can all vary providing opportunities for the informed buyer.

Also see How much can you borrow and 100% Mortgages)



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Important note about your credit rating

Many websites don't make it clear that filling in their mortgage enquiry form means you might be credit checked.

This can put you at risk.

UK Mortgage lenders may assume an enquiry you have aleady made to another lender means you were turned down - and not that you are in fact carefully shopping around and rejecting the bad deals.

The best way around this significant problem is to ask an independent mortgage adviser to make anonymous enquiries for you.

Without risking your credit score an adviser can find you the best available mortgage deal. They will also know how likely you are to be accepted by the lender if you decide to make a formal application.

If you would like a recommended adviser to check out the best deals for you, anonymously, simply fill in the quick form below.

" Hmm..." You might think; "Won't I be hounded by a salesman hungry for my business? "

This is the most common question we hear from our users.

The answer is no you won't.

Firstly your enquiry is only passed to ONE person on a carefully vetted list of independent advisers.

Secondly, these mortgage advisers are professionals. Even when the market is slow they are busy people. There many people who need to move homes, or get a remortgage and are looking for advice all the time. Regardless of the state of the property market, life goes on.

So the advisers don't have time to hassle people. It just doesn't work like that. No one is gong to be forced into taking out a mortgage unless they really need one.

The advisers are very used to talking with people, perhaps like yourself, who are only "dipping their toes" into the water.

Many people just want an initial quick chat and if they feel comfortable will ask the advisor to contact them again later - often in several weeks or months. As a professional, the adviser will simply diarise this and call back at the appropriate time. There is no obligation at all.

(In the unlikely event that you ever feel at all "hassled" by someone on our list please let us know immediately. We have never heard of this. But if it happened we would definitely want to know).



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