Understanding First Time Buyer Mortgages.

First Time Buyer Mortgage Products.

As the housing market continues to sustain higher property prices, with no immediate sign of any substantial fall, it has become increasingly difficult for the first-time buyer to secure that initial home. Traditionally mortgage lenders would expect a deposit of at least 10% before offering reasonable mortgage terms in return. But even at the very lowest end of the current market, the prospective homebuyer would need to raise funds in the region of £15,000-£25,000 to meet this restrictive criteria. For those at the beginning of a career, or perhaps already with a child or children, this first obstacle may seem overwhelming. But neither is the alternative prospect of long-term renting any more reassuring. In fact the cost of renting property may currently equal the cost of a monthly mortgage repayment, and quite often even exceed it.

Apart from this obvious disadvantage, the tenant’s position and rights would be unlikely to improve, and eventual ownership of the rented property would be out of the question. There might also be the very real possibility of having to vacate the rented property should the owner decide to sell or move back in. In short, there is little to recommend long-term renting, and it should be viewed only as a necessary and temporary expedient. And although the obstacles to buying that first property may seem initially very daunting, they can, of course, be overcome.

It has long been recognised that the huge potential of the first-time buyer to introduce new demand for their business is essential for continued growth in the mortgage-providing sector. And, as with any other market place, the business of providing mortgages has to respond to the needs and requirements of its customers. This is why the 10% deposit ceiling has now been more or less discarded, and many mortgage lenders are currently asking for deposits of as little as 3-5%, or, indeed, for no deposit at all in many case.

Innovative packages inviting the parents of prospective buyers to use their own homes as collateral in lieu of a deposit, of allowing friends to buy jointly or collectively and encouraging more single people to enter the property market are now widespread and mainstream. In fact many of the options open to the second or third time buyer are now available to the property newcomer, including lower rates, cash-back and outstanding loan consolidation. There are also mortgages available which offer to absorb the fees of surveyors, solicitors and the exceptional cost of initial home furnishing.

The amount which can be borrowed has also risen considerably. Many mortgage companies are now prepared to lend as much as five times the annual salary of the borrower, and some even more than that. There are also specific deals for graduates, where potential earnings are considered as part of the mortgage equation. And many highly reputable mortgage companies now operate a step-by-step service guide to assist prospective borrowers to negotiate all the various stages of the house-purchasing process. It is, of course, important to research all the various options available before entering into a contractual agreement. And it would be advisable for the any first-time buyer to seek reliable professional help in selecting the option which may be best suited to their particular needs and circumstances.