Is the 95% mortgage announcement a good move?
Getting on the first step of the property ladder can seem like a giant leap these days. If you are young and haven’t been able to save up a deposit, it might seem that your dream of home ownership coming true is something that might only happen in the distant future.
Well, we at Waterfords have some good news for you. It looks like the Prime Minister, Boris Johnson, is trying to give you a leg up onto that ladder. We were catching up with the digital Conservative Party conference where Boris declared that he wants to relax stringent rules on deposits and mortgages for first-time buyers.
From generation rent to generation buy
In the current COVID-19 climate, you will typically need to find a deposit that is between 15 and 20 percent of the price of the property. It has become more difficult recently, with lenders becoming much more risk-averse, particularly in the first-time buyer market and moving away from low-deposit mortgages.
This is a shame because many people who could easily manage a monthly mortgage repayment, cannot afford a deposit for a property in the first place. You may have found your perfect home but until you can find thousands of pounds for the deposit, that move is out of the question. Very frustrating!
The Prime Minister’s speech seems like a welcome move, and if it works, could turn many people from renters into home-owners – from generation rent to generation buy.
A solution with a problem?
There is a potential problem. Boris’s words were welcomed by many, although a lot of observers noted that it was short on detail. Yes, it grabs the headlines, but what are the mechanics of it all?
Will you be eligible for a 95 per cent mortgage, or will there be some criteria that will still prevent you getting on the property ladder?
Will the banks be expected to take all the risks, or will the Government step in and be a guarantor?
And will banks, who are still hurting from losses incurred years ago, be willing to offer the mortgages in the first place, particularly if they are now lending in a more responsible manner?
Whatever happens, it looks like the Government is trying to do something to help first time buyers, but we await the full details.
Help is out there, and it has been extended
As a first-time buyer, there is still help out there for you. Help to Buy is a scheme that started with the government lending “first-time buyers and existing homeowners’ money to buy a newly-built home”. It proved popular when it was first launched, and we saw a many purchases using this initiative, particularly as people only needed a five percent deposit.
The Government has now confirmed that a new Help to Buy: Equity Loan scheme “open to first-time buyers only will be available for two years from 1 April 2021. The Help to Buy scheme will end on 31 March 2023”. In a nutshell, you put down a five per cent deposit, the Government provides a 20 per cent loan, and you find a mortgage for the remainder.
However, bear in mind that there are different limits based on UK regions, and there are strict rules that come with it. Make sure you research the scheme properly to ensure it is right for you.
Waterfords can put you in touch with an independent mortgage advisor to give you free advice on whether you are eligible for help to buy and whether it’s the right option for you as first time buyer. Find your local Waterfords branch.
It might be that as a first-time buyer, you don’t want to get involved in these schemes, and want to do as much as you can to raise a larger deposit yourself.
It takes hard work and discipline to put aside thousands of pounds, but it can be done, and we have seen people do this, even though they are getting into property for the very first time.
From saving a percentage of your monthly wages, to selling items online, to taking extra part-time work or even moving back in with your Mum and Dad, it can be a tough slog but you have to think of the end result – the property of your dreams that belongs to you.
If you need more advice on this, our team at Waterfords have plenty of experience pairing people and property, so can offer you some tips tailored to your specific requirements.
Find your local branch or call our friendly team on 01252 235348 and find out how we at can get you moving as a first-time buyer! Alternatively, browse our latest properties for sale throughout Surrey, Hampshire and Berkshire – CLICK HERE
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