Mortgages for first time buyers

Paul Demarco from ESPC Mortgages offers some information and insight into mortgages for first time buyers. 

Mortgage interest rates

Due to the economic impact of COVID-19, mortgage interest rates are at an all-time low, with the Bank of England base rate currently at a rate of 0.1%. In addition to this, fixed rates and tracker mortgage rates are also very low.

Low interest rates are generally positive news for borrowers as it means lower monthly repayments.

Deposit

Prior to COVID-19, most lenders required a minimum 5% deposit for a mortgage. However, due to the impact of the pandemic, many have tightened their borrowing restrictions and raised their minimum deposit levels to 15% for much of 2020.

However, more lenders started offering 10% deposit mortgages at the end of 2020 and start of 2021. The new mortgage guarantee scheme from the UK government is also set to make 95% mortgages more available from April 2021.

You can also make use of certain schemes to boost your deposit amount, which brings me to…

First Home Fund

The First Home Fund is a Scottish scheme in which the government will lend first time buyers up to £25,000 to top up their deposit to buy their first home. You must save a 5% deposit with your own money, and the First Home Fund can raise your deposit to the 15% required by most UK lenders to get a mortgage.

This scheme is due to reopen for applications on 1st April 2021, for transactions to be completed in the 2020/2021 financial year.

LIFT scheme

LIFT is open market shared equity scheme which is available for properties on the open market. The LIFT Open Market Shared Equity scheme allows people on low to moderate incomes to buy homes that are for sale on the open market. Buyers require to put towards a modest deposit for the property and in return own an equity stake of 60% to 90 in the property.

The Scottish Government pays for the remaining balance under an agreement with you. When you come to sell your home, the Government receives the equivalent stake on the sale value. There are restrictions under the scheme on the purchase price which is linked to the number of bedrooms. 

ESPC Mortgages

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. 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. No individual mortgage advice is given, nor intended to be given in this article. 

The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.

ESPC (UK) Ltd is an Appointed Representative of Lyncombe Consultants Ltd which is authorised and regulated by the Financial Conduct Authority.