If you are looking to purchase a house for the first time, you might be wondering what the mortgages available for first time buyers are. There is some help on offer for those who have not yet started on the property ladder and are unsure about whether they will be able to afford a house. This article will go into the main two types, as well as evaluate the best type of mortgage for first-time buyers.
What Is A Help-To-Buy Mortgage?
With a help-to-buy mortgage, first-time buyers who have a deposit of at least 5% can borrow 20% of the purchase price on an interest-free basis for the first five years. If the person lives in London, where rent prices are much higher, they can borrow up to 40% of the purchase price. The house should cost no more than £600,000, and it applies only to first time buyers and homeowners who are purchasing a ‘new build’ house.
There is an application programme for help-to-buy. Crystal Clear Financial Planning can help advise if this is the best option for you and assist with the application process.
How Do First Time Buyer Mortgages Work?
If you have a lower income, it is advised to save up as much as possible for a deposit, which will mean less money will need to be borrowed (and banks will be more inclined to loan a mortgage). Bigger deposits will also be able to access better mortgage rates.
Comparing The Two
The help to buy scheme is a good option for those who don’t have much saved for a deposit (from 5%) for the house that they would like to purchase. First time buyer mortgages are better for those who have a sizable deposit saved up(20% or more), which banks will look on more favourably.
If you’re not sure which option is best for you, please get in touch with Crystal Clear Financial Planning – we’re here to help!
Your home may be repossessed if you do not keep up repayments on your mortgage.
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