Mortgages for first time buyers

Is it a good time to enter the market? ESPC mortgage adviser Paul Demarco has advice for first time buyers.

Mortgage interest rates are at an all-time low, with the Bank of England base rate currently at its lowest ever rate of 0.5% since March 2009, which is a very positive factor.  In addition to this fixed rates and tracker mortgage rates are also at an all-time low, which means that monthly mortgage payments across the board are also very low compared to previous years.

There are more and more first time buyers entering the market as the minimum deposit with the majority of lenders is now 5%. After the crash in 2008, borrowers were required to have 10% deposits minimum, which made it difficult for first time buyers to save up enough. However, over the last two years this has been lowered.

Average selling prices in the ESPC coverage area of east central Scotland have risen by approximately 5.8% from last year. So this is a good time to buy into the market for the first time, as we see steady growth in prices which brings confidence to mortgage lenders.

The overall sales volume has also increased by 12.6%year on year, meaning there is a greater choice of properties coming to market, and the total sales value of properties sold has increased by 19.2% year on year. The median time to sell is now 33 days – seven days faster than last year.

There are various schemes to assist first time buyers. These schemes are designed to assist people who have a very small deposit and wish to keep their mortgage payments as low as possible.

Lift scheme

Lift is a shared equity scheme which is available for properties on the open market. When you buy a LIFT shared equity home from a private house builder, you also own the home outright, but the Government and the private house builder will jointly fund an interest-free equity loan for you and each hold a security over the proportion of your home they have funded. There are restrictions under the scheme on the purchase price which is linked to the number of bedrooms.

Help to buy 1

Help to buy 1 is commonly known as the Equity loan scheme, which is for all new build properties. Buyers require a 5% deposit and up to 20% of the value of the property will be provided by the Scottish Government. This can be repaid at any time or on the sale of the property.

Help to buy 2

Commonly known as the Mortgage Guarantee Scheme, is available to first time buyers and home movers. Again, the buyer must have a 5% deposit.

We at ESPC can help you with any questions you may have. We are independent and deal with the whole of the market, and have the knowledge and expertise to analyse and advise you. Come in and see me at your convenience as I will be glad to help.

As independent mortgage advisers, ESPC Mortgages can help will all aspects of understanding your budget, applying for a mortgage and dealing with the relevant insurance requirements. Pop in for a no obligation chat with Paul or one of the team at our Edinburgh showroom or give them a call on 0131 253 2920.

The information contained in this article is provided in good faith. Whilst every care has been taken in the preparation of the information, no responsibility is accepted for any errors which, despite our precautions, it may contain.