Property Buying Advice
First time buyers are having serious difficulty getting onto the property ladder
, even with the rays of hope that have appeared this year.
The reality is that mortgage are available and there are more lenders offering rates that are at historically low levels, and we are seeing higher loan-to-values (LTVs) than in 2011. There are currently 49 mortgages requiring at least a 5% deposit, compared with 24 in 2011.
In order to have your mortgage application approved, its essential to be prepared. You will need to present three years history of where you lived (without any gaps), three months payslips or three years accounts, three months of bank statements and full details of any borrowing.
Its essential that the lender feels that they are lending to someone who has the right information to show your recent financial history, and a decent credit score. Its important you look after your credit history pay all bills on time and make sure you are registered on the electoral roll.
More than the deposit being an issue, its really about your personal circumstances to enable you to be approved for a mortgage. Many lenders will look at what you earn to determine what you can borrow and combine this with outgoings, age, whether you have children and whether you are in good health. Some lenders will let you borrow five times your income, but if you have a family this could impact on what you can borrow.
A good start in getting a mortgage is to get an agreement in principle. This means a lender will confirm in writing how much they are willing to let you borrow and it can help vendors confidence in whether you are a serious buyer.
For people borrowing more than 74% interest only is no longer an option, so you need to work out your sums on a repayment mortgage. Lenders will only look at interest only if you have way of repaying the loan such as savings or other assets.
One option for people who are struggling to get a mortgage is to turn to parents or close family members to act as a guarantor on a mortgage, offering lenders additional security on what could be seen as an unreliable borrower.
Another option is shared ownership, where you buy a percentage share of the property whilst paying rent on the balance, bringing down your deposit requirement dramatically.
If you are looking to buy a new build, you could look at the Homebuy scheme launched by the Government. This means that you can get a loan on the purchase price, with no fees for five years, or shared ownership. You will need to take out a mortgage to pay for your share of the property.
So whilst lenders are still making it difficult to borrow money to buy a house, there is still a lot of choice out there.
I would always suggest speaking with an independent financial adviser before you start looking at houses, as they can help you identify what your circumstances are, and what you will need to do in order to be successful as a first time buyer.
The view that buying a property is as much an investment as a home looks outdated may very well be the case, however in the UK at least I think we are still a nation of people where possible and practical, who like to own their home long term, rather than renting for the long term.
House prices may be unlikely to rise much in the near future, however again historically it has proven to do so over the long term, giving us confidence that it has a strong chance of doing so in the future, therefore making the idea of buying a home a good investment.
by: Susan Alexander
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