Onto the Property Ladder

First-time Buyer | October 16, 2019

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Property Ladder for the First-time Buyer
Photographer: CJ Dayrit | Source: Unsplash

With a wide range of product choices and a requirement to meet the strict borrowing criteria, the mortgage process can be confusing. It makes sense to take advice, especially for the First-Time Buyer.

To own your own home remains a desire of many who are currently renting, or living at home. If you (or your children) find yourself in this situation, then you can take comfort from the continued support that exists.

The government, for example, wants to get more people onto the property ladder through initiatives such as the Help-to-Buy scheme. It’s also keen to encourage new house-building – for which the first-time buyer is a key audience. In fact, in 2018, house-builders applied for permission to build 370,000 new homes. This is double the number from a decade earlier. (Source: Home Builders Federation/Glenigan, Housing Pipeline report, May 2019 release)

The First-Time Buyer Deposit

Providing a deposit is a key stumbling block for many. There is much-improved lender support with products that only require a 5% deposit. Going back a decade, there were just three mortgage lenders who offered a product with a 5% deposit. By April 2019, there were 60 providers to choose from!

The deal rates will not be as attractive as those where a much larger deposit is provided. But there were sizeable year-on-year drops in April for the average two and five-year fixed rate deals, coming out at 3.28% and 3.73%, respectively. (Source: Moneyfacts, April 2019 release)

Additionally, if you have just a 5% deposit, then consider the Help-to-Buy scheme for new-build properties. Here the government would loan an extra percentage enabling you to access the better Loan-to-Value (LTV) deals on offer.

As the average LTV figure for first-time buyers sits at around 76% (comparable to a 24% deposit) many have already taken advantage of this scheme. If not they may have benefitted from the Bank of Mum & Dad, or simply saved for a larger deposit. (Source: UK Finance, March 2019 figures, May 2019 release)

Positive climate

House price growth (or decline) will vary wherever you are in the UK, but in general, growth is slowing. Stalling house prices, combined with relatively cheap borrowing, and lower deposit requirements, may usher in a period of opportunity for those looking to make their first property purchase.

Additionally, don’t forget that the first-time buyer is also a very attractive proposition for sellers. This is because there’s no property chain behind them, creating one less hurdle in the home-buying process.

Our support

It’s vital that you take professional advice. We would help navigate you through the affordability, evidencing of income and credit rating hoops. In the process, we would identify some of the decent deals that are still on offer. It could be a 95% LTV package, or perhaps the 60%+ LTV deals, where the interest rate reduces to reflect the larger deposit contribution.

Please talk to us to see if we can help you (or a family member) step onto the property-owning ladder.

Your home may be repossessed if you do not keep up repayments on your mortgage.

What is your Credit Rating?

– This may not have been an issue for you previously, but it’s an important factor when seeking a mortgage loan.

– The role of a credit score is to try to predict your future behaviour. This means that people who have a poor score may suffer.

– We can talk through the steps you could take to help improve your rating. This will make you more appealing to the lenders.

– Surprisingly though, rental payment history (particularly for those not in social housing) isn’t necessarily reflected in people’s credit reports. However, there now seems to be greater enthusiasm from the credit agencies and from those that use their service to include this information. This is likely to benefit some first-time buyers.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. A typical fee is £295. Ask for a personalised illustration. The Mortgage Bureau is a trading name of A.M. Mortgages (UK) Ltd. Authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some aspects of Buy to Let mortgages.

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