First Time Buyers – Getting On The Property Ladder
Getting a foothold on the property ladder is not easy – particularly these days with property prices above the amount most people’s salaries can cover. Reports from the property market show that the age of first time buyers has increased in recent years as younger people struggle to get a mortgage. Some first time buyers struggle to cover all the costs of buying, and often hadn’t anticipated all of the extra costs beforehand. There are some solutions to these problems, however. The market is responding to the needs of first time buyers and can offer special types of mortgage and extra support. If you mention to your lender or advisor that you are a first time buyer, they will offer advice specifically for your situation.
No Deposit? Finding 10% of your mortgage is no mean feat. Younger people often don’t have the savings to put down a deposit, and have to borrow the money. There are 100% mortgages available for those unable to find the cash deposit, or mortgages where you provide just 5% of the total amount. Unfortunately many of these mortgages apply charges (Higher Lending Charges) and have less flexible terms than other mortgages. Salary Not High Enough? If your salary doesn’t qualify you to take out a large enough mortgage, you may want to look at guarantor mortgages.
Basically, someone who is more financially secure (often a parent) will undersign your mortgage agreement, promising to honour the debt should you fail to meet repayments. This type of mortgage is often chosen by students, who either then pay ‘rent’ to the guarantor, or pay the mortgage directly to the lender. The guarantor should be totally clear about the responsibility they are undertaking, and it’s a good idea to have a legal document written up laying out all terms of the agreement. Share The Cost You may want to consider taking out a joint mortgage. This doesn’t just apply to couples – two or more people can enter a partnership and apply for a mortgage together. Normally a bank will pay up to 3.75 times the largest salary plus the amount of the second salary. If you choose to undertake a joint mortgage you should have a legal agreement with the person you are going into partnership with. All the terms should be clearly understood by all parties, and the paperwork should be processed by a solicitor.
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