Looking at purchasing your first property? Then this week’s column should be of interest as there’s a number of ways to help you get on to the property ladder that may not be widely known.
First Time Buyers will usually require a minimum 5% deposit, but product availability increases with a 10%+ deposit. Some lenders will allow a 5% builders deposit, but this must be confirmed as a gift and non-repayable. Some lenders will allow the deposit to come as a gift from the Bank of Mum and Dad, or an immediate family member. This can include step family, aunts and uncles and is acceptable for first time and subsequent buyers. The money must be a transparent gift that has originated in the EU and can be easily traced back to the originating source. A letter from the family member will usually be required and needs to advise the gift amount, relationship the person gifting the monies is to the applicant, confirmation that it is a gift and not a loan and therefore is not repayable, confirmation that they do not currently own the property being sold and that they will not live in the property or have any interest in the property post completion.
Some lenders may allow a loan of up to 100% of the property value if parents or another immediate family member will act as guarantor or provide additional security. Those guaranteeing, in the main, will need to show evidence of affordability for both their current residential mortgage and the one they are intending to guarantor and possibly allow a charge to be taken on their own home.
All positive indeed and that’s not even touching on the number of Help to Buy, Right to Buy and Shared Ownership schemes available.
Rates have reduced lately in a bid to assist this underserved market segment and criteria is definitely more accommodating. Income multiples tend to be between 3.75 to 4.5 x joint income and terms and conditions always apply! However, Lenders are showing a willingness to assist First Time Buyers and in the current market, that can only be a good thing.