First Time Buyers
How much can I borrow?
Up to 4.5 -5x income in general and up to 5.5x for high income earners and professionals. It will depend on the following:
Currently due to covid-19 restrictions the maximum LTV across the lending market has been reduced. Any rate you will obtain will not reflect the full market.
Which lender is the best?
When there are so many lenders in the market, how to choose the right one.
First time buyer rates available from 1.21%.
Larger the deposit lower the rate. Many first time buyer deals come with FREE valuations and legals.
On the Market – portal that allows agents to have greater control of propety listings.
Nestoria – aggregation from other property portals.
Nethouseprices – Past sale prices and estimated current values.
Prime Location – site run by zoopla.
PurpleBricks– online property portal with local agents.
Right move – largest property portal in UK.
Residential People – free to list portal.
SmartNewHomes – another site bought by zoopla, but dedicated to new builds only.
Tepilo – site set up by TV presenter Sarah Beeny selling for a fixed price. May not give an advantage of less competition as the site says same properties will be promoted through RightMove and Zoopla.
Zoopla – Portal from a large conglomerate that owns many financial sites – potential duplicates with other big sites.
HMRC Stamp duty calculator
Monthly Payment Calculator (downloadable excel format)
Standard First Time Buyer mortgage
- Covid Restriction – Maximum lending currently 90% with a restricted number of lenders. Once the restrictions are lifted the is expected to revert to normal 95% LTV mortgages.
- Standard FTB mortgage is a whole market mortgage for non-concessionary house purchases.
- Financial help for family in the form of a gifted deposit is acceptable.
- Available to those who had not owned a property in the past. Varies from lender to lender. Some lender will treat non-ownership in the past three years as a First Time Buyer.
- The rate is based on Loan to Value or LTV. Higher the percentage borrowed higher the rate. Special rates for FTBs.
- Can be up to 4 applicants and does not need to be all family members.
- Many lenders provide free surveys and legal service
Family Guarantor Mortgages
- Allows a First Time Buyer to borrow a higher loan than what standard income multiples would allow.
- Guarantors can be grandparents, parents, siblings and step relations.
- Several options available from providing a refundable deposit to having a charge over the guarantor’s property.
- Cannot own another property at the same time.
- Income multiples of up to 4.5x for the applicant.
- No adverse credit accepted.
Three main types
1. Family Deposit Account
Members of the family provides a security deposit (up to 20%) which is returned once the value of the property increases or sold. The deposit earns interest.
Lender provides 95% loan for purchase. Applicant provides 5% deposit.
2. Family Offset Account
Family holds up to 20% of deposit in an offset account on their own name. No interest is earned in the offset account.
Lender provides 95% of loan and applicant 5%. Interest is charged on 75% of the loan only, so gaining a saving on payments.
3. Family home as security
Lender takes a charge on parent’s / family member’s home and provide 100% loan for purchase.
Affordability based on applicant’s income. Applicant provides no deposit.