It’s a known fact that people are now on average in their 30’s before they can purchase their first property, and even then, only if they have a household income of around £42,000, according to research by the Affordable Housing Commission.
For many, the cost of renting also prevents them putting any substantial amount by each month in savings towards a mortgage deposit. However, there are creative ways that family members can help, and local mortgage broker Homeline Mortgages have some advice for those striving to obtain a first-time buyer mortgage.
Mortgage specialist Oliver Bishton says that there are many new products on the market that are designed specifically to help first time buyers, and couples should seek professional advice about the various options. Oliver commented, “This isn’t about rich families helping their children, there are mortgage products available now whereby any family member such as a parent, grandparent or other relative can contribute in various ways towards a mortgage. Some of the less well-known mortgage lenders have come up with creative solutions that can speed up the first-time buying option. It’s well worth looking into with a professional adviser.”
For students, there are Buy for Uni mortgages where parents act as guarantor and the mortgage payments are made from shared rental income. Similarly, a Guarantor Mortgage means that parents or grandparents’ home and savings are used as security against the mortgage loan until such time that the first-time buyer can take on all the financial responsibility. There can be various caveats to a guarantor mortgage such as parental income, age and occupation, but your adviser can talk you through these.
This is also the case with Joint Mortgage, Sole Proprietor mortgages when the first-time buyer has the deposit but would struggle making the monthly payments. Parents become jointly responsible for the mortgage repayments whilst the first-time buyer can still take advantage of various allowances.
Where saving for the deposit is an issue there are various springboard type mortgages whereby a family member can transfer some of their own savings into a mortgage deposit. This type of family deposit mortgage is treated as a deposit loan, with parents getting their funds back with interest after a set period. An Offset Mortgage is similar in as much as the parents’ savings account is linked to the child’s mortgage borrowing.
For those over 55 and with significant equity in their home, a Lifetime Mortgage is an option to release tax free funds from their property which can then be used for any purpose, including gifting to first time buyers.
Oliver added, “This may all seem so complex, and in a way, it is, which is why we like to take the strain away from you by researching the best available mortgage deals currently available to suit your individual requirements. Do come and talk to us, because 9 times out of 10 we can find a solution.”
To book an appointment call 01202 937444 or visit www.homelinemortgages.co.uk
Initial consultation is free of charge. We may charge up to 1% of the amount to be borrowed. For example, if the total amount borrowed is £150,000 our 1% charge would be £1,500. However, we only charge 1% if a case is particularly complex. Our typical fee is £495. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.