As Brits, we love to own our own homes. However, what happens if you’re desperate to get on the housing ladder but don’t know if you will be able to get that all-important mortgage? Will you ever be able to buy the home of your dreams?
The answer, probably, is yes.
The housing market is still moving although it’s been a bit of a rollercoaster over the past year, most recently due to buyers frantically trying to take advantage of the stamp duty holiday which then slowed down in lockdown 3 and has now accelerated again with the latest stamp duty holiday extension – more on that in a moment… The Government is also encouraging lenders to provide mortgages with higher loans to value again and if you’re looking to buy your first property, you’ll be cheered by two significant announcements from Chancellor Rishi Sunak’s Budget.
The first is the return of 95 percent loan-to-value (LTV) mortgages. When the pandemic arrived in March 2020, the mortgage providers began to insist on mortgage deposits of at least 10 percent. This made it more difficult for people who didn’t have the money available for a deposit to make a successful application.
Now the Government is part-guaranteeing 95 percent mortgages for properties with a purchase price of up to £600,000. Though remember, the smaller your deposit, the fewer options you’ll have in terms of mortgage deals and the more you’ll pay in the long run as interest rates will be higher for 95 percent products.
Another bit of good news is the extension of the Stamp Duty ‘holiday’. This means that all buyers in England and Wales can buy a residential property without having to pay any Stamp Duty tax on the first £500,000 – a move that could save you up to £15,000. One thing to note, in England, the full holiday extension for any non-first-time buyers will only run until 30th June this year, meaning the threshold at which you start paying the tax remains at £500,000. From the 1st of July until the end of September, an interim zero percent threshold of £250,000 will then be in place until the end of September. Then, from 1st October it will revert to the usual £125,000. This is not applicable to first-time buyers though, who will still benefit from the full zero tax break when purchasing their first home (valued up to £500,000). (https://www.gov.uk/stamp-duty-land-tax)
In Wales, the Land Transaction Tax threshold remains at £250,000 until it returns to the previous level of £125,000 on June 30th. There’s no news from the Scottish Government on their plans yet.
More generally, mortgages are still within reach for most working people.
The key is to get your financial affairs in order before you apply. Buying with another person increases your choice and the amount you can borrow, while a good credit score is vital for getting approved. You can improve your credit rating in several ways.
The first is to make sure any outstanding debts are paid off or are serviced regularly. There’s nothing more frustrating than being rejected for a mortgage because you didn’t pay a mobile phone bill years ago or your ex-partner has failed to keep up payments on a joint loan.
Secondly, make sure you’re on top of all bill payments, and – though this shouldn’t need saying – don’t get in arrears at your current rented property.
You can improve your chances further by using an independent mortgage broker like Charles Cameron & Associates. Thanks to our years of experience in the mortgage industry and our independent status, not only will we be able to recommend the best product to suit your needs from a vast range of lenders, but we’ll collate all of your paperwork and check everything is in order before making the application on your behalf – and then manage your application from start to finish. We don’t stop there, as we also offer a “move-in” service which transfers all your utilities and could help you save on household bills!
If you’d like to apply for your first mortgage, why not see how Charles Cameron & Associates can help you?
