Tag : Mortgage Deposit

First Time Buyers

Buying for the first time

Buying for the first time?

For first time buyers, getting onto the property ladder may seem like a daunting process, but there is help available.

With demand outstripping supply in many areas, the average UK house price has been pushed beyond the reach of many of the UK’s estimated 335,750 first time buyers. A report from The Land Registry (based on data from November 2016) shows an annual price increase of 6.7%, taking the value of the average UK property to £217,928.

When you consider that first-time buyers would typically put down around 20% against their first home, it’s no wonder that finding a sufficient deposit is becoming increasingly difficult – especially for those currently renting. In fact, one of the major lenders reported the average first-time deposit has more than doubled since 2007 to more than £32,000.

If you’re struggling to save a large deposit you may be able to find a mortgage rate of 90% or 95% – provided you can meet the lender’s affordability criteria.

The bank of mum and dad
Meanwhile research by the Social Mobility Commission has found an increasing proportion are turning to their parents for help buying their first home. In fact, over a third of first-time buyers in England (34%) are relying on the bank of mum and dad, compared to one in five in 2010.

The ‘bank of mum and dad’ has been a useful financial foot-up for many, but what about parents who want to help their kids but don’t have savings?

Government help
Although the Help to Buy: mortgage guarantee scheme ended in December 2016 the Help to Buy: Equity Loan is still available. The Government lends you up to 20% of the cost of your newly-built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. Equity loans are available to first time buyers as well as homeowners looking to move. The home you want to buy must be newly built with a maximum price tag of £600,000.

Other initiatives to help first-time buyers include The Help to Buy: ISA which helps you boost your savings by 25%. For every £200 you save you receive a government bonus of £50. The maximum government bonus you can receive is £3,000.

Sound mortgage advice can take the complexities out of the home-buying process and maximise your chances of getting an affordable mortgage.

At a glance:
335,750 first time buyers in the UK
x2 first-time buyer deposits doubled since 2007
34% of first time buyers rely on parents
£217,928 average value of a UK property

If you need help getting onto the property ladder please get in touch

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

Mortgage Advisers

Buying for the first time?

Buying for the first time?

For first-time buyers, getting onto the property ladder may seem a daunting process, but there’s more help available than you might think.

With supply and demand at an imbalance, the average UK house price has been pushed beyond the reach of many first-time buyers. August data from Land Registry shows an annual price increase of 8.4%, taking the value of the average UK property to £218,964. When you consider that first-time buyers would typically put down around 20% against their first home, it’s no wonder finding a sufficient deposit is becoming increasingly difficult – especially if you are currently renting.

Help is at hand
A report from Which? shows that just over half of first-time buyers (52%) had to rely on financial support from a parent or family member in order to purchase their home. This ‘bank of mum and dad’ has been a useful financial foot-up for many.

If you’re not able to put down a large deposit you may be able to find a mortgage rate of 90% or 95% – provided you can meet the lender’s affordability criteria.

Government help
Although the Help to Buy: mortgage guarantee scheme came to an end in December 2016, the Help to Buy: Equity Loan is still available. Here, the Government lends you up to 20% of the cost of your home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. Equity loans are available to first-time buyers as well as homeowners looking to move, provided it’s for a new-build
worth less than £600,000.

The Help to Buy: ISA will help you boost your savings by 25%. For every £200 you save you receive a government bonus of £50. The maximum government bonus you can receive is £3,000.

Sound mortgage advice can take the complexities out of the home-buying process and maximise your chances of getting an affordable mortgage

If you need help getting onto the property ladder please get in touch.

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

downsizing your home

Bank of mum and dad

With rising house prices outpacing income an increasing number of young people will borrow from parents and family in order to get onto the property ladder.

The 10th largest mortgage lender

The combined amount which parents and grandparents will be prepared to gift or loan their children to help them buy their first home is estimated to be £5bn. This puts them alongside the 10th largest mortgage lender in the country, Clydesdale Bank, which lent the same amount in 2014.

Research from Legal and General estimates the “Bank of Mum and Dad” will be involved in approximately one in four UK mortgage transactions this year, showing the extent of how borrowing from family members is supporting the housing market. The risks of borrowing from Mum and Dad However, as well as the obvious benefits, Legal and General suggests people from less advantageous backgrounds will be increasingly squeezed out, effectively widening inequality in the housing market.

They also caution that the “Bank of Mum and Dad”will, at some stage in the future (they estimate 2035), come into a funding crisis, caused by unexpected care costs for parents and grandparents living longer. The problem is exacerbated for families in London who have been known to contribute more than half their net worth on their children’s house purchase.

Other investment options for your children

There are more ways to help your children financially than contributing to their first home, but whatever approach you take it’s important to start early. By saving for your children from an early age (even perhaps before they are born) you can help put them in a better financial situation for their adulthood.

If you would like advice on choosing the right savings and investment options for you and your children, please get in touch today