Rising house prices can make it difficult for many people to buy a house especially those looking to buy their first home can find it difficult to save up more than a 5% deposit.
Naturally the larger a deposit you can put down of home’s value then the more competitive your mortgage rate would be, and for this reason, some people decide to save up for longer. If house prices rise while you are saving, you could find yourself back at square one so it is important to thoroughly research and take advice before you decide which route is best for you.
While the lowest mortgage interest rates may be reserved for borrowers with big deposits of around 40% or more, there are still plenty of competitive deals for buyers with just 5% deposit.
Most banks and building societies look at your affordability based on your incomings and outgoings, and check your credit score, before they decide if they will lend you the money – they need to be sure that the mortgage you require is affordable and realistic for you to be able to pay back.
The government’s Help to Buy scheme is aimed at any buyers who are only able to raise a 5% deposit so that more people can access 95% mortgages from lenders such as Lloyds Bank and Halifax.
Under the help to buy scheme you need to be buying a property that is not worth more than £600,000 and to have a deposit of at least 5%. The government will then guarantee up to a further 15% of the property's value, in return for a fee from the lender offering the mortgage deal.
One of the first decisions you need to make when choosing a mortgage is whether to go for a fixed or a variable rate mortgage.
With a fixed rate, most of which last for two, three or five years, you don't need to worry about your monthly repayments changing due to interest rate fluctuations.
However, the rates offered can be slightly higher so take this into account. You will also need to pay an early repayment charge (ERC) if you need to get out of the deal before the end of the fixed term.
When it comes to variable rates, meanwhile, you have the choice between trackers, which move in line with the Bank of England base rate, and discount mortgages that are linked to the lender's standard variable rate (SVR).
AA Mortgages chief Michael Johnson has pledged to help steer customers towards easy and effortless mortgages thanks to the launch of a range of new fixed-rate products. Johnson, the AA director of financial services, has overseen the intro
News - 02 June 2017
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