With a summer general election called, the Conservative party is throwing out a few ideas that might just help them win over a few young voters, and one of their big swings for the fence appears to be the 99% mortgage.
The government is looking at plans to push 99% mortgages as a main part of their manifesto, with the idea being to help younger first-time buyers who have recently been struggling to save the usual amount for a deposit. Lenders typically require a 10% deposit, but Rishi Sunak’s government is proposing a guarantee that they will underwrite some of the larger and riskier loans offered with a deposit of just 1%.
This obviously makes it much easier for first time buyers to get a foot on the property ladder, as did the recent mortgage guarantee scheme that helped eligible people secure 95% mortgages.
WHAT IS THE BEST MORTGAGE LOAN FOR FIRST TIME BUYER?
The best mortgage for a first time buyer will obviously depend on how big a deposit they can afford. The more that can be paid in the deposit, the less that needs to subsequently be paid over the course of the rest of the mortgage. However, with so many lenders having a minimum threshold for deposits, first time buyers are often prohibited from buying property as they are typically the buyers with less upfront money.
Offering 1% or even 0% mortgages clearly opens up a lot of possibilities for first time buyers, although many lenders are concerned about the risks. But despite the concern, last year already saw the UK witness its first 0% deposit offered for the first time since the 2008 financial crisis.
DO FIRST TIME BUYERS GET BETTER MORTGAGE RATES?
Usually, for first time buyers to receive such low deposit mortgages, there will be a number of requirements that must be fulfilled. This is especially true when a first time buyer is trying to get lower interest rates on top of the low deposit.
If you are a first time buyer, you can find out about your chances of low or no deposit mortgages in Derby by speaking to local experts, who can also explain how a mortgage works for first time buyers and go into more detail on if first time buyers get better mortgage rates or not.
Eligibility criteria will usually include the applicant needing to have paid in full at least twelve months’ rent in a row within the past 18 months, and not be looking to borrow more than a set amount (up to £500,000, for example). They would also need to pass affordability and credit checks, and there may also be restrictions placed on what kind of property can be purchased (no new builds, for example).
If you want to learn more about what the best mortgage loan is for a first-time buyer, then contact the experts at Integritas Financial Planners.
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