The property market has seen some ups and downs as a result of the coronavirus pandemic of 2020, but how has this affected first time buyers? The main challenges for first time buyers are:
- Saving a deposit
- Getting a mortgage
- Finding a suitable property that they can afford
With the UK facing a recession, buying your first home is not as straight forward as it may have been earlier this year (pre-Covid-19), but it is not all doom and gloom – there are some positives too.
Bad news for first time buyers: there are not as many 10% mortgages as there used to be…
Let’s get the bad news out of the way first. The reality of buying your first home in a recession means that it may be harder to get a mortgage. At the start of 2020, there were over 700+ 10% mortgages available (where you provide 10% of the value of the chosen property as a deposit for your mortgage) and now it is thought that there are around just 60 available at any one time. Part of the reason for this is that lenders are unable to cope with the volume of applications they are receiving.
This makes it more difficult to choose the best mortgage deal for you. You should get advice from a mortgage advisor to help you make the most informed choices for your financial future and see what mortgage deals are available to you, depending on how much deposit you are willing to part with and what your affordability is as a first time buyer with no existing equity.
Good news for first time buyers: you don’t need to pay stamp duty and now is the time to save as much as you can…
You may be surprised that there is actually more good news than bad news to come out of the pandemic for the property market. Following the uncertainty earlier this year, the housing market has since started to bounce back. The introduction of the stamp-duty tax break from the government has seen house sales increase whilst prospective buyers take advantage of the scheme. Many first-time buyers have also claimed that lock down has helped them to save more money towards their deposit, putting some in a good position to buy their first home.
Stamp-duty – What are the new rules?
Stamp duty is a tax that you pay on property when you buy it. Earlier this year, the government announced that house buyers will not have to pay stamp duty on any property up to the value of £500,000 – even if you are an existing home owner – up until the end of March 2021. The usual rule is that if you are a first-time buyer, you are exempt from stamp duty on property purchases up to the value of £300,000, which will resume after the current rules end next year.
How do first time buyers get the right mortgage?
Qualifying for a mortgage depends on many things, but it is mostly about affordability. Now is the time to get your finances in order so you can prove to any lender that you can not only manage your finances well but that you can afford the monthly repayments. Rates are currently considered ‘good’ for prospective property buyers as mortgage rates are low, in some cases. If you can get a deposit together for at least 10% of the value of the kind of home you wish to buy, you can then start looking at properties in the areas that you would like to live. Due to there being less mortgage deals to choose from, you may find that you wish to wait until you have saved a higher percentage deposit to make your future monthly repayments more affordable. Do your research and speak to a financial adviser about the best types of savings accounts for you as a first-time buyer.
Before embarking on your property quest, it is highly recommended that you speak to a mortgage adviser to get a good idea of how likely you are to be accepted for a mortgage, as they can provide you with advice on how to get there and help you find the best deals. They can also talk you through the process of buying your first home so that you know what to expect when buying your first home and help to make things seem a bit less scary.
How can Choice Mortgage Solutions help?
How can Choice Mortgage Solutions help?Our team of experienced, knowledgeable mortgage advisers can help you find the best solutions for you and help you to buy your first home. We can help you assess your finances to see what adjustments you may need to make in order to be eligible for a mortgage and you can also use our handy mortgage calculator by clicking here. There are lots of things to consider, including financial protection such as insurance to help cover your payments in case you lose any of your income. Get in touch with our team online or by calling 0800 612 8099 or send an email to: info@choicemortgagesolutions.co.uk.