Are you a first-time buyer feeling confused about what to do for the best?

With current market conditions and with more limited mortgage options, it’s understandable that you might be feeling wary about purchasing your first home.

Is now a good time to buy? 

The housing market continues to move and shift, which makes it difficult to predict when the right time to buy would be. However, there are a few things to consider that might help you decide to take that first step:

  • Owning your own home means you’re paying off your own mortgage, rather than renting and paying off someone else’s

  • Looking for a property that has future potential e.g. opportunity for renovation, room to extend for a growing family?

  • There’s no rush to decide. It’s a buyer’s market and prices are subdued so you can take your time

  • One of the alternatives to buying is renting and that’s becoming more expensive

    Rents are also rising quickly as many landlords have sold their properties following changes to mortgage debt relief and stamp duty, meaning there are less properties available for rent,” says Rajan Lakhani, resident money expert at Smart Money App Plum. (1)

  • If you’re thinking you’ll be in the property for a while, even though house prices may dip for now, they will, in all likelihood, rise again over time

    “..if you fall in love with a property, and are in the financial position to afford to move – now could be a great time to secure a good deal.” Mr Short of GetAgent (1)

If you’ve decided you’re going ahead with buying your first home, then you’ll need to think about your mortgage options.

Four possible mortgage solutions suitable for first time buyers

Some of these are speciality mortgages and so it is advisable to approach a professional broker, like Mallory Financial, with qualified advisors who can provide specific advice about the different mortgages and relate this to your individual circumstances. 

If you’re struggling to find the money to save for a deposit, then this could be a suitable option for you. Shared ownership allows you to purchase a percentage of a property and rent the remainder through a housing association. You will need to find the deposit and mortgage amounts relevant to the proportion of the house that you are buying as well as the rent to cover the rest. There is also the option to buy more of the property as time goes by. 

However, not all lenders offer mortgages for shared ownership and 100% of the ground rent and service charge will need to be paid, regardless of the share of the property etc.

This is a great option if you’re unable to meet the lender’s affordability requirements and you have a friend or a family member who would be happy to help. Both names would be on the mortgage and both incomes are included, however, your name is the only named owner of the property.

It’s worth noting that the friend or family member would also be jointly responsible for the mortgage payments and any problems would result in this going on their credit report. Situations can also change and if the relationship turns bitter, then there is a risk that the contribution towards the mortgage will stop.

The government backed 95% mortgage guarantee scheme is designed to help buyers secure their first home with just a 5% deposit. (2)

There is also a 100% mortgage product called a ‘Track Record Mortgage’ from the Skipton Building Society, where applicants, who are over 21 and currently renting, can borrow from 95% to 100% of the property’s value. (3) To be eligible for this mortgage, the applicant must have proof of paying a minimum of 12 months’ rent in the last 18 months.

If you don’t have enough income to qualify for a mortgage on your own, then this option could work, especially if you have family members who are willing to act as a guarantor. A guarantor means they will continue to repay the amount borrowed if you can no longer afford the repayments. 

Which option is best for me? 

There are other mortgage options out there that might be more suitable. Our qualified mortgage advisors can help you understand which option would be more suited to you and your circumstances and are on hand to talk at a time that fits with you and your schedule.

You can kick start the process today by getting in touch today.

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