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First time buyer mortgages – loans dry up for those with small deposits
First time buyer mortgages – loans dry up for those with small deposits
The availability of first time buyer mortgages requiring a 10% deposit has plunged by 25%, with first time buyers with small deposits being left unable to get their foot onto the property ladder.
Tarporley,
Cheshire,
United Kingdom
(prbd.net)
01/10/2012
The availability of first time buyer mortgages requiring a 10% deposit has plunged by 25%, with first time buyers with small deposits being left unable to get their foot onto the property ladder.
In addition, first time buyer mortgages for those with just a 5% per cent deposit dropped by nearly 35% according to the website Moneysupermarket. Lenders Ipswitch, Skipton BS and Cambridge have all pulled their 5% deposit mortgages, leaving just 28 loan options available for first time buyers.
Unfortunately, first time buyers have a very limited number of mortgage options available to them, whereas those with large deposits have the pick of the mortgage deals with low interest rates and very desirable mortgage terms.
Although the government is investing money encouraging banks to lend to first time buyers and kick start the housing market, it doesn't seem to be enough to change the status quo and help first time buyers purchase their first home. The £80million scheme seems to be making little impact, although we won't see the data on the impact until the end of 2012.
Although mortgages have been getting cheaper it's rare to find low interest rates for first time buyers with a small deposit, with one of the best deal available being a fixed-rate deal with Newcastle BS at 5.99 per cent and a £690 fee making the monthly payments £966 on a £150,000 loan - with the total cost being £58,650.
For first time buyers with a 10% deposit, there currently 244 loans available, in contrast to 484 deals available for buyers with a 40 per cent deposit.
The best current deal if you have a 10% deposit is with RBS at 4.79 % and no fee. Monthly repayments on a £150,000 loan work out to be £859, with the total being £51,540.
However, the larger the deposit, the better the deal. For example, borrowers can get a 2.95 per cent five-year fixed-rate deal with NatWest (although beware of the fees on these deals with this one being a whopping £2,495). With this deal, the monthly repayments on a £150,000 loan are £707 with a £44,915 cost.
Susan Alexander is a property mentor, she specialises in buy to let advice and helping property investors build a successful property portfolio. She says:
"It's imperative that you speak to an independent financial adviser before you start looking at houses, as they can help you identify what your circumstances are, and what your repayments will be given the deposit you have available.
"In the UK 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. First time buyers want to get on the property ladder, but things are still so tough for those without a large deposit.
"House prices may not rise too much in the near future, but 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."
Notes to Editors
So many people think they can invest in property themselves and feel that they don't need additional advice. Consider most of the worlds most successful people, they fast track to where they want to go by getting a coach or mentor To find out how a mentor can help you achieve your goals click here. To find out more about Susan Alexander Coaching click here.
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This is where using an experienced property mentor who is also an investor can be invaluable in helping get a buying investment property decision right every time. For more details visit: http://www.susanalexandercoaching.com/
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