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Buying a Home

Interest rates on first-time mortgages continue to fall

First-time buyers are enjoying lower mortgage rates as interest rates continue to fall. Buyers looking to purchase their first home and have less than 10% of the property’s value to use as a deposit are applying for loans for the balance of the property’s value – in other words, up to 95% of the total value.

Mortgage rates

The actual interest rate charged to first-time buyers will depend on the exact deposit the purchaser has, but as a guide, for those with a 5% deposit, the rate in now 3.25%; for those with 10%, it is 2.62%.

For buyers wishing to apply for a five-year fixed-rate mortgage, the rates are also falling with 3.57% for a 5% deposit and 2.94% for a 10% deposit. These competitive rates are seeing mortgage lenders competing against each other to attract buyers, which is good news for buyers of first-time homes and those wishing to sell.

Incentives

In 2015, the government launched a “help to buy Isa” aimed at helping and encouraging people to save a deposit for their first home. The scheme offered a bonus to anyone saving money as a deposit, with the maximum amount of £3,000 being offered to those saving £12,000. If two people signed up together, the maximum bonus of £6,000 was offered for saving £24,000.


It is estimated that to date, more than 265,000 properties have been purchased using the scheme. Last month’s deadline saw a huge rise in applications by people wishing to take advantage of the scheme.

Property

In addition to ensuring they have enough saved for a deposit, first-time buyers should also make sure they have money to pay for the additional costs involved in buying a property. Once an offer has been made and accepted, buyers living in the east of the country should commission a homebuyers report Cambridgeshire to check for any hidden costs associated with the property. A homebuyers report Cambridgeshire could flag up problems that the buyers are unaware of and be used to successfully renegotiate a lower price.

Despite the current market, it is still advisable for first-time buyers to save as much as they can to put down as a deposit. After all, the bigger the deposit you make, the lower the interest rate you’ll have to pay.

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