Over the past twelve months the mortgage lending market has stripped around 90% of products off their shelves, meaning that a varied choice of mortgage deals are not available for first time buyers. This means saving a bigger deposit is imperative. In previous years, a 5% deposit was deemed acceptable, however talking about the current climate, Louise Cuming, Head of Mortgages at Moneysupermarket.com advises, ‘now we have go to the extreme that if you have only got a 5% deposit you may as well not bother. It isn’t right to say that everybody that hasn’t got a 25% deposit is going to be a bad payer but that is nearly how the lenders appear to be looking at things now’. Louise recommends saving at least a 10% deposit before you start looking for property.
It is also important to consider any additional costs that may arise from owning your own property. Unexpected expenses may crop up at any time, including maintaining the property and needing to add or renew fixtures. Be prepared for these instances by saving some money in case of emergency. It is also important to purchase a good quality home insurance policy incase something happens to your house that you cannot control, such as a burglary or damages to the property that could not have been prevented. Compare home insurance at Moneysupermarket.com to find the best deals in the market.
It is notable that it hasn’t been this hard to save in a long while, with the general cost of living seemingly increasing by the day. Food, fuel and utilities are but a few household bills that have risen as a result of the credit crunch. This teamed with excruciatingly low interest rates means that saving has never been harder. The government has recognised that first time buyers are struggling to get on the property ladder, so have recently introduced Homebuy Direct – a new scheme which means that buyers only have to find a mortgage of 70% of the value of a newly built property. The remaining money will be raised by loaning half from the government, and half from the company who built the house. Only first time buyers can be involved in the scheme and their total annual income must be below Â£60,000. Interest rates are frozen for the first five years, giving the new house owner time to get on their feet and adapt to the extra expenses they will be incurring due to owning a property. Hopefully the scheme will give many young people who have just started their careers to be able to find an affordable way to own a modern, newly built home.