THOUSANDS of prospective first-time buyers are struggling to get on the property ladder with house prices at record levels.
The reasons for house prices increasing are complex.
Some experts have claimed they are being driven up because there are more people looking to buy than there are properties for sale.
But if you’re a prospective first-time buyer concerned about how you’ll get onto the ladder, there are options.
Greg Cunnington, 从 抵押 broker LDN Finance, has revealed his top five issues affecting first-time buyers at the minute, and some ways to get around them.
You can’t afford to
Lot of first time buyers are finding it harder and harder to afford a mortgage because of the pace that house prices are increasing at.
According to the ONS, UK house prices increased by 12.4% over the year to April 2022.
When you consider that wages are not rising at this rate – and households are being hammered by soaring inflation, it’s no surprise that many simply can’t afford to get on the property ladder.
然而, 据专家介绍, prices could fall off later into the year.
Greg said explained that just 15% of any lenders’ mortgages can be at over four and a half times a buyers income.
What this means for first-time buyers is that there’s less mortgages to go around.
“With the data used to assess clients’ expenditure by lenders increasing due to the increased cost of living, this has got even tougher,” Greg added.
How to combat this: The Bank of England has decided to abolish one of its “stress tests” to check if borrowers can afford mortgage payments at a higher interest rate.
The change comes into effect next month.
And Greg predicted the announcement would “neutralise” the impact on people being able to afford mortgages.
On top of this, he said guarantor mortgages, where a parent or close family member takes on some of the risk of the mortgage, could help boost first-time buyers purchasing power.
The same goes for joint borrower sole proprietor mortgages which involve a relative or close friend contributing some of their income to another’s mortgage without joining them on the deeds.
“This can help boost your borrowing power if you have a family member with an income that can assist,” Greg said.
“还, some lenders will lend more to young professionals, key workers and contractors.
Greg said another challenge facing prospective buyers was deposit requirements, with most lenders requiring at least a 5% deposit and many 10% 或者更多.
“When a large chunk of income has been going out in rent payments it creates a trap for first-time buyers as they cannot afford to save for the deposit due to renting.”
How to combat this: Some lenders are offering 5% deposits to prospective buyers, Greg said.
Nationwide is also lending up to five and a half times a first-time buyers’ 收入, with what is called a “Helping Hand” 抵押.
“This is for employed clients only at the moment, but we find it is really popular with first-time buyers and helps them to buy the property they want.”
New build property deposit requirements
And with the current lack of housing stock on the market, a lot of first-time buyers who are solely looking at new builds offers limitations on what they can get for their 钱.
How to combat this: Greg said Lloyds Banking group has confirmed it will now lend to buyers with a 5% deposit looking for a new build home.
“We expect more lenders to follow this in the coming months, making new builds more accessible to those with lower deposits,” 他加了.
Greg said the coronavirus pandemic had caused negative ripple effects for some peoples’ 信用评分, which was hampering their chances of buying a first home.
他说: “With the challenges of furlough and the economic restrictions during the pandemic we find more first-time buyers have some minor credit blips.
“As most lenders use automated credit scoring systems, this can see them declined when looking to obtain a mortgage.”
How to combat this: Greg said lots of mortgage firms will now take a manual assessment of buyers’ credit ratings, and if they see an improvement situation they will lend on that basis.
You may need to use a specialist lender and the mortgage may cost you more – but there are deals available.
还, you should keep on top of your credit score. You can check all three major credit reference agencies for free via checkmyfile.com.
Greg said his company deals with lots of first-time buyers with variable income.
This means they earn their money from commission or through bonuses or they may have more than one job.
These types of people can find it hard to get the amount they need to borrow when they meet their go to their bank for a mortgage.
How to combat this: You usually do need to have two years of self-employed accounts to apply for a mortgage.
然而, Greg said more lenders were allowing buyers to use their variable income by doing manual assessments.
他说: “This is where access to the decision makers at mortgage lenders is key, and again emphasises why it is so important to speak to an intermediary with access to as many lenders as possible to ensure you have explored all options.”
You can find a mortgage broker using unbiased.co.uk.
Ideally you want to find a “whole of market” broker, as some will only recommend lenders who they work with.
Some brokers have access to “direct-only” mortgages, which mean they are not available to customers direct.
Brokers will also charge you a fee – this could be a flat charge ro a percent of the amount you want to borrow. Check before you sign up to use one.