When the credit crunch kicked in, a number of banks and other lenders had to find ways to cut down on their lending straight away, meaning rules and restrictions tightened up dramatically and first time home buyers suddenly found it that much harder to find a mortgage broker who was willing to lend at all. Having a large deposit helped lenders to feel more comfortable and made getting a mortgage almost completely the domain of the rich or those with a heft amount of savings.
The economy is beginning to recover now, meaning lenders are starting to create new deals all the time which allow people with less substantial savings and/or income to apply for a mortgage – in some cases even lending 100% mortgages to first time buyers.
A 100% mortgage is when the lender fronts the entire cost of the property to the borrower, allowing the borrower to pay back the mortgage just as they would if they had a deposit of their own. In many cases, lenders will still only allow this if the buyer has a guarantor who will put their own property up as an asset to secure the lender should anything go wrong. But this is still an option for first time buyers if a family member is willing (and trusting enough) to allow this. 90% mortgages are also becoming more popular with first time buyers and mortgage rates for these are at an all time low. This means now is the perfect time for those who have previously been put off by high rates or the need for large deposits to get their foot on the first rung of the property ladder.
If this has made you want to start looking in a mortgage, the first thing you will need to know is what your credit score looks like. You can apply for this from Experian or Equifax online and you should only attempt to apply for a mortgage if your credit record is clean – lenders will not lend out such a large amount to a customer with a bad credit record.
You should then choose the type of mortgage that will work best for your situation, using a uk mortgage calculator to find the best repayment plan for you. A repayment mortgage calculator can show you exactly how much you are looking to pay back monthly and for how long, and you can find a free mortgage calculator on most good comparison websites.
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