While the market is still very hot, it could start to cool from next year. This is down to the increase in the cost of living, tax increases coming in and speculation the Bank of England could raise interest rates to tackle inflation which could see the cost of a mortgage rise.
The next decision on whether to raise interest rates will come on Thursday, November 4. While it is possible that growth could slow, there are a number of factors that suggest a significant fall is not inevitable:. Unless you are a buy-to-let landlord or a property investor , a home is first and foremost a place to live. If you need a home now and have saved up a deposit, then it is best not to try to time the market before you buy.
You could end up putting your life on hold for a long time — especially if prices keep going up. Smaller banks and building societies have also been launching their own mortgage deals, including:. Find out more: ChengVoon who saved for eight years to pull together a bigger deposit rather than use a government scheme. Find out more: Should I use a mortgage adviser? While it can be a good choice for those who find it difficult to climb the property ladder, the risks can outweigh the benefits of buying a home if house prices drop.
Also bear in mind that the larger your deposit, the lower your interest rate tends to be. However, it is only available to those buying a new-build home. And some deals may offer better value than those on offer under government initiatives. This can be particularly helpful when trying to navigate the home loan market for the first time.
A broker will be able to find the deals best suited to your individual situation. They will also know how to present your case to the right lender and in the best possible light.
This will include affordability checks, and the lender looking at your credit report to see that you are credit-worthy. When applying, you will need to provide paperwork such as bank statements, recent payslips for evidence of income, plus documents that prove your identity.
Restrictions like these vary by lender, so be sure to check the small print and seek advice from an independent mortgage broker, should you need it. You can either apply directly to a lender once you have found the deal you want, or you can seek the advice of a mortgage broker. This applies whether or not a deal is part of the Mortgage Guarantee Scheme.
Some mortgage brokers provide a free service to customers and take their fee from lenders. Others may charge a fee for their service. Any high loan-to-value mortgage also leaves you more exposed to the risk of negative equity where you owe more than your property is worth in the event that house prices fall. Critics also claim that the return of high loan-to-value mortgages could trigger artificial house price inflation.
Lenders will usually only lend up to a maximum 4. This file details your personal borrowing history and can be accessed by lenders. It gives them an indication about whether or not you are a safe bet for a loan. You can obtain your report from credit reference agencies like Experian, Equifax and TransUnion — and this can often be done for free. There is no interest to pay on the Government part of the loan for the first five years. The offer is solely for first-time buyers and only applies to new-build properties sold by a Help to Buy registered homebuilder.
There are different rules for this scheme in Scotland and Wales. Shared Ownership is another option. This is known as staircasing. Different rules apply for shared ownership in Scotland and Northern Ireland. The long-term view is to ring-fence a pool of cheaper properties for those struggling to get on the local property ladder. The government says that 10, homes a year could be ultimately sold under the scheme.
Most are only likely to be for first-time buyers. And borrowers will need the financial backing of usually a family member or very good friend to secure a deal. The property is still legally owned by the borrower. These mortgages usually work in one of two ways. You can understand more and change your cookies preferences here. This stands for loan-to-value and simply means the percentage of the property's value that's being covered by the mortgage. The amount you'll be able to borrow will vary depending on the lender and your personal circumstances.
Some lenders place caps at 4. There's also some uncertainty around whether house prices will go up or down in the next few months. A drop in house prices would make low-deposit deals more risky, as borrowers could potentially be left in negative equity. They'll assess the full range of your income, regular outgoings and any debt, among other things, when working out whether you can afford a mortgage.
They'll also 'stress test' your finances. This means checking whether you could still afford the mortgage payments if interest rates were to rise. You can see what this would look like using our mortgage interest calculator.
If you're currently furloughed due to COVID, lenders will generally only take your furloughed income into account. Speak to a mortgage broker if you want guidance on getting yourself into the best possible position before applying. Making sure that you're registered on the electoral roll is a quick and easy way of boosting your credit score. A family member could gift or loan you money for a deposit. If the money is a gift, you'll need to provide evidence to the lender that you won't be required to pay it back.
Some lenders place a cap on what percentage of a deposit can be gifted, so consider taking advice from a mortgage broker first. Alternatively, your family member could act as a guarantor for your mortgage.
0コメント