As if things aren’t hard enough for the large swathe of young people (and even those who are maybe not so young) in the UK who fall into the first time buyer mortgage category.
The odd ‘blip’ aside, property prices are seemingly on a continual upwards trajectory, the best UK mortgage deals are not quite at their best right now, and the cost-of-living crisis is still very much alive.
However, recent news from Number 10 may finally give some hope to first time buyers after what has been a tough few years.
Chancellor paves the way for first time buyers
As a longstanding Guildford mortgage broker, we’ve seen many permutations of first time buyer mortgage schemes over the years, many of which have come and gone.
However, news from the top that around 36,000 first time buyer mortgages will be made available to those looking to finally put their feet on the property ladder – from this month, it’s worth adding – has certainly piqued the interest of our team of Surrey mortgage advisers.
The premise is simple. The government backs lenders to provide 95% loans for first time buyers. And, if there are any losses along the way, the government will ensure that it’s not the lenders who lose out.
It’s not so much an innovative idea. It’s just an idea that now has full government support, the result of which will lead to a number of benefits.
Benefits of 95% mortgages
It’s important to note that we’re not so much highlighting the benefits of 95% mortgages (we all know what they are), but the benefits of government-backed 95% mortgages. The government-backed aspect makes all the difference for the following reasons: –
1. Shared risk
Lenders could quite easily provide 95% mortgages any time, regardless of whether the government is behind them or not. But it’s risky, and banks are businesses that don’t really like to take risks. However, if the government backs – or underwrites – first time buyer mortgages, then the risk is much smaller; negligible, even. The result? More 95% first time buyer mortgage deals become available.
2. Increased confidence, increased movement
The mortgage industry often works in upwards and downwards spirals – and our team of mortgage brokers in Guildford have seen many over almost two decades. For example, if rates go up, less people move and the economy suffers. However, in this case, we’re potentially looking at an upwards spiral in that the more available first time mortgages are, the more people move and the better the economy does (and so the cycle repeats).
3. More competition
It’s a relief to say that in this case, we’re not referring to competition between first time buyers looking to access a limited pool of first time buyer mortgages. We’re actually referring to more competition between lenders. After all, if more first time buyer mortgages become available, it effectively becomes a buyers’ market. The more products that are available, the more competitive lenders have to become to entice would-be homeowners to use them.
No time like the present
Given how the Chancellor’s announcement has only just taken place, there’s likely to be a spike in interest over the next few weeks as first time buyers seek to access one of the 36,000 ‘unlocked’ deals.
Our view is that anyone who’s considering buying their first home should get in touch with a mortgage broker as soon as possible to explore the best first time buyer mortgage deals now open to them.
As a team of Guildford mortgage advisers with access to a comprehensive panel of lenders, one mortgage consultation with us will open the door to an array of first time buyer deals currently available.
So, why wait? Get in touch today.
Ready to apply for a first time buyer mortgage? To speak with a mortgage broker in Guildford, contact our team of Surrey mortgage advisers by calling 01483 238280 or e-mailing info@complete-mortgages.co.uk.
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