First Time Buyers | Mortgages 100% First Time Buyer Mortgage
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Falling house prices have always been the secret wish of every wannabe first time buyer. Few home owner hopefulls would have predicted, however, that falling house prices (in some areas at least) would lead to lenders tightening their lending credentials and unanimously scrapping 100% mortgages. More...
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Fixed (no tie-in beyond benefit period) | ||||||
| First Direct Offset | 5.49% | 2 years | 6% | 80% | No Overhang |  |
| Alliance & Leicester Prime | 6.14% | To Aug 2010 | 7.19% | 75% | No Overhang | |
| Derbyshire BS (Direct) | 6.79% | To Sep 2018 | 7.09% | 90% | No Overhang | |
| Fixed (with tie-in beyond the benefit period) | ||||||
| Market Harborough BS (Direct) | 3.99% | 2 years | 7.15% | 75% | Overhang | |
| Capped | ||||||
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Light Adverse Payment History | ||||||
| Skipton BS | 6.19% | To Aug 2018 | 6.45% | 75% | No Overhang | |
| Ipswich BS | 6.49% | To Aug 2011 | 7.24% | 80% | No Overhang | |
| Medium Adverse Payment History | ||||||
| Heavy Adverse Payment History | ||||||
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Discount (with tie-in beyond the benefit period) | ||||||
| Discount (no tie-in beyond benefit period) | ||||||
| HSBC Bank plc (Direct) Purchase | 5.43% | 2 years | 6.25% | 90% | No Overhang | |
| Mansfield BS (Direct) | 5.65% | 3 years | 7.19% | 75% | No Overhang | |
| Barnsley BS (Direct) Branch only | 5.69% | 2 years | 7.19% | 85% | No Overhang | |
| Market Harborough BS (Direct) | 5.95% | Term | 7.15% | 75% | No Redemption | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| HSBC Bank plc (Direct) Purchase | 5.43% | 2 years | 6.25% | 90% | No Overhang | |
| First Direct Offset | 5.49% | 2 years | 6% | 80% | No Overhang | |
| Alliance & Leicester Prime | 5.89% | 2 years | 7.19% | 75% | No Redemption | |
| Market Harborough BS (Direct) | 5.95% | Term | 7.15% | 75% | No Redemption | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Direct Line | 6.39% | To Jun 2010 | 6.5% | 95% | No Overhang | |
| Bank of Ireland 1st Start | 6.99% | To Jul 2013 | 7.09% | 95% | No Overhang | |
| Bristol & West Mortgages First Start | 7.19% | To Jul 2013 | 7.09% | 95% | No Overhang | |
| Coventry BS | 7.39% | To Sep 2013 | 7.09% | 95% | No Overhang | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Barnsley BS (Direct) BTL | 6.19% | 3 years | 7.19% | 75% | No Overhang | |
| Principality BS Buy to Let | 6.39% | To Jun 2010 | 7.09% | 60% | No Redemption | |
| Lloyds TSB BTL (Direct) | 6.54% | To Aug 2011 | 7% | 80% | No Overhang | |
| National Counties BS Investment | 6.79% | To Aug 2013 | 7.35% | 75% | No Overhang | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Market Harborough BS (Direct) | 6.1% | Term | 7.15% | 75% | No Redemption | |
| Scottish Widows Bank Offset | 6.29% | 2 years | 6.49% | 75% | No Overhang | |
| Yorkshire BS (Direct) | 6.54% | To Jun 2013 | 6.9% | 75% | No Overhang | |
| Lender | Rate | Duration | Standard Rate | Max LTV | Tie in | Proceed |
|---|---|---|---|---|---|---|
| Mansfield BS (Direct) | 5.9% | 2 years | 7.19% | 75% | No Overhang | |
| Principality BS Direct | 5.99% | To Jun 2010 | 7.09% | 75% | No Overhang | |
| HSBC Bank plc (Direct) Fee Free | 5.99% | Term | 6.25% | 90% | No Redemption | |
So now that the goal posts have moved a little, what does it mean for the first time buyer? True the prospect of entering the mortgage market does seem a little more daunting, but there are still favourable mortgage plans out there for people with a sizeable deposit. How sizeable will depend on your lender, the property and where you want to live, so don’t miss our first time buyer comparison tables for a quick glance at the what’s on offer.
First time buyer deposit
A jittery housing market has seen Alliance & Leicester and Britannia Building Society offer a more cautious 90% mortgage to first time buyers when both had previously offered loans of up to 95% of the home’s value. However, these two lenders are not alone in tightening their lending criteria, in fact we have seen is a complete abolition of 95% mortgages across the board. The changes mean a typical first-time buyer currently paying just under £150,000 for a home will now have to find a £14,800 deposit.
If you live in London the prospect of getting on the property ladder is a lot bleaker. With the average entry level property costing £250,000 any first time buyer would have to find a deposit of £32,500 plus additional costs such as legal fees and stamp duty. Discounting entry level properties, the average price of property in London is currently £350,000 which would require a whacking great deposit of £45,500 even before you calculate the cost of stamp duty (approx £10,500). A quick tally tells us the up-front cost of buying an average property in London is £56,000 – enough to buy you a London property outright in 1990.
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Sensible borrowing
In some cases, lenders are still offering first time buyers mortgages at up to 5 times their salary. Borrowing on this scale can lead to two significant problems:
1) Negative equity – where the house value is less that your mortgage.
2) Defaulting – over committing and missing payments.
Stay within a budge that is realistic. Most lenders will allow you to borrow a more affordable amount. This is usually 3.25 x salary for a single person or 2.5 x joint salaries for couples.
Other mortgage costs
Your lender may require payment of a Mortgage Indemnity Guarantee (MIG), particularly if your deposit is small. Then there are fees, ie, estimation fees, as well as the possibility of having to pay stamp duty.
If you as borrower, default on repayments and builds up arrears, the mortgage provider may have no alternative but to repossess your home. However there are some circumstances when the sale of the property does not raise the necessary funds to repay the mortgage, such as negative equity.
A MIG is insurance that provides the lender with protection against this scenario. A MIG insures the lender against losses should the house be repossessed and the property is not enough to cover the amount due in arrears.>Note: Be sure to seek impartial professional advice on your first-time-buyer mortgage.
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