A mortgage service which allows first-time buyers to approach a home purchase on the same footing as a cash buyer has been launched by online mortgage broker, Habito.
The new ‘Habito Go’ essentially fast tracks through the mortgage recommendation process to allow the buyer to upgrade to a ‘guarantee of funds’ which will enable them to buy their property in cash.
As a result of this buyers gain greater buying power, something which will put them in a better negotiating position and make them more attractive to sellers.
It could potentially even lead them to making a saving on the asking price.
Indeed, research by YouGov, commissioned by Habito, found a third of sellers said they would be more likely to consider accepting an offer from a buyer if they were to pay in cash.
But Habito also said Habito Go aimed to alleviate the fear of uncertainty associated with buying – something which nearly half of first-time buyers experience.
Who is eligible?
First-time buyers who are keen to use Habito Go will need to have quite a bit of cash saved upfront. Indeed, the product is only available to those buyers who wish to purchase up to 85% of their property’s value, which means to be successful, applicants will need a deposit of at least 15%.
Potential customers will also need to have their eligibility assessed first and Habito will carry out a survey on the property to ensure its meets its criteria.
Once customers pass the approval stage Habito said it will fast track the affordability checks, valuations, searches and comprehensive legal work.
There is a price for the service – indeed customers will pay a fee of 1.95% of the total value of the property. This cost also covers the certainty the buyer has the money to buy the house they want.
How it works
Once checks have been made and approved, Habito said customers could get their loan offer in as little as 24 hours, enabling them to make an attractive cash offer to estate agents and sellers.
After this, the buyer will continue to apply to for their mortgage though Habito’s brokers. In many cases, because the process is being fast-tracked to two weeks, the mortgage may sometimes be secured after completion.
If the mortgage didn’t come through in time, Habito explained, the buyer would buy their home with the Habito Go loan. When the mortgage eventually came through, this would be used to pay off the loan.
Andrew Hagger, personal finance expert, described Habito Go as an innovative product that had the potential to wipe out some of the major hassle factors encountered by first-time buyers.
“The speeding up of the process and ability to negotiate a ‘cash buyer’ type discount could be highly beneficial and many borrowers could see some or all of the product fee costs negated due to a lower purchase price being achieved,” he said.
“Removing stress, worry and giving first-time buyers a greater chance of getting their number one choice of home – rather than always wondering what might have been when you’ve had to settle for second, third or fourth choice – is a great benefit of Habito Go.”
