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Lenders aim to curry favour with first-time buyers

Fist-time buyers in the housing market are not only in good position when it comes to negotiating the price for their first house, they are also in a strong bargaining position when shopping around for a mortgage due to the currently slow housing market.

Lenders now offer some innovative and flexible mortgages aimed at first-time buyers especially with new buyers being few and far between. As a result of the slowing house market lenders are all too eager to attract the business of first-time buyers.

For those who can afford only a small deposit, help is at hand with many lenders, such as Bradford & Bingley and the Woolwich, recently reducing the cost of borrowing by cutting the higher lending charge.

There are many mortgage options for first-time buyers. You can choose from 110% loans, higher income multiples of more than four times salary, flexible loans, longer term loans of up to 40 years, trackers, guarantor mortgages, interest only, cash backs and fixed, variable or discount loans. Don’t be daunted by what appears to be a confusing and seemingly endless list as with good independent advice you should be able to house the right mortgage for you.

The Halifax advise that you shouldn’t give up if you cannot afford a home at present, just keep saving till you can, you will be surprised how quickly you can afford that deposit. Why pay rent and line someone else’s pocket?

When considering the affordability of mortgage repayments, make sure you consider all the other household bills as well as the money required for decorating if needed. Allow for interest raises as well as these other costs when calculating your monthly outgoings.

Family help

If you do not earn quite enough to apply for a mortgage then it is worth considering a guarantor mortgage where either your parents or another close family member guarantee the loan for a certain period of time.

If you choose to go down this root, it has to be remembered that it is the guarantor’s responsibility to notify the lender when the time limit expires otherwise the guarantor can find themselves liable for the repayments even though they might assume they no longer have a responsibility to the repayments.

Mortgages for professionals

Some lenders, such as the Coventry Building Society, include the parent’s income in the income multiple calculation if the applicant has a defined professional career path such as doctor or lawyer. This means he/she will earn more in the future and will be able to take over the whole loan.

23/5/05

 

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