There is no easy way to get onto the housing ladder anymore, although there are a number of alternatives which dont involve asking the Bank of Mum and Dad to give you a leg up. However whilst we are currently experiencing so much uncertainty regarding interest rates, it pays to remember that these options might not be suitable for everyone.
Remortgage with Alliance and Leicester
Most banks now offer mortgage multiples of up to 5 times a borrowers income, whilst allowing customers to take out loans for amounts in excess of the propertys value, and for terms as long 30 years. This is quite a gamble as there is the wider issue of accruing interest on a larger amount of debt which continues to go unpaid.
find out how much your mortgage payments will be
Instead of this, there is the more stable option of buying with a friend or a partner which will allow you to split the mortgage, whilst gaining the extra trust that comes with a co-signatory rather than a tenant who is only contractually obliged through their lease.
Alternatively, FTBs can look into a Government backed scheme such as shared ownership to facilitate the purchase. Shared ownership allows individuals to take out a mortgage on their chosen property for a pre-determined percentage of its value from a minimum of 45 per cent. From this point they can then choose to gradually up their share until they own the property outright, remain in the property and then sell it onto another shared ownership tenant or back to the housing organisation when they choose to move.
There are some drawbacks though as this type of scheme is largely designed to aid those in housing need. Thus priority is given to existing public sector tenants or those on local authority or housing association waiting lists, however this is not to say that it wont apply to others depending on their individual circumstances.
calculate your mortgage repayments here
In addition up to four people can enter into joint ownership as part of the scheme, but they must all individually and jointly meet the eligibility criteria.
Warren Bright, chief executive of propertyfinder.com advises FTBs to be realistic about their situation: The desire to own a home remains deeply ingrained in the national psyche. Neither profound social changes in the way we live, move and work, nor high house prices have diminished Britains appetite for bricks and mortar.
compare mortgages
Mortgage-wise, first-time buyers are still urged to seriously consider where they will be financially within the next few years, alongside their current finances and the interest rate. A first-timer will now spend a huge 18.3 per cent of their income on their mortgage repayments, with todays further hike to 5.5 per cent sending it soaring. In addition, the interest they will be accruing especially if their mortgage is interest only will also see a serious jump.
The vast majority (88 per cent) are plumping for fixed rates, meaning that they were by far the most popular mortgage product in March accounting for a record 78 per cent of loans.
Michael Coogan, director general of the Council of Mortgage Lenders finds it highly encouraging that first-time buyers are opting for fixed rates: Affordability constraints continue to be a barrier to home-ownership for many first-time buyers. Mortgage lenders are trying to help by offering innovative products where appropriate but will want to ensure lending remains prudent.
remortgage here
Loading ...