Mortgages Section

First Time Property Buyers - How Parents & Family Can Help

We are all aware of the financial problem many first time buyers experience when trying to get on the property ladder. But help is often on hand from family members who can contribute, normally to the initial deposit or paying part of the monthly mortgage repayments.

First time buyers with this financial help should therefore check out these two deals from The Chelsea Building Society and the Yorkshire Building Society.

Chelsea Building Society - Helping Hand Package

• This mortgage can take into account the salaries of up to 3 family members when deciding how much to lend
• The family members will be allowed to contribute up to 50% of the monthly loan repayments

Yorkshire Building Society - 5 Year Fixed Rate Offset Plus

We think this idea is great -

• Relatives who deposit their savings with the Yorkshire B.S. can use them to offset another family member’s mortgage
• For example, if a £100k mortgage was taken out and family members had £30k in savings then the total mortgage would be £70k alongside the monthly repayments calculated on this level
• Obviously in this situation no interest would be paid on the £30k in savings

Other Mortgage Tips For First Time Buyers

• Do as much research in the mortgage market as you can, this cannot be emphasised enough, for example -
• Many mortgages tailor made for ‘first time buyers’ are actually more expensive that a standard mortgage available to everyone, including first timers - Be on the lookout for the cynical marketing
• Also be on the lookout for mortgage deals that waive interest in the early months as they’re generally good deals
• Stay away from mortgages that have higher lending charges, meaning that if you borrow more than 90% of the property’s value you'll pay a higher interest rate
• Always contact 2-3 mortgage brokers to scout out the market and see what they offer, this advice will initially be free and the added bonus is that you’ll learn a hell of a lot about the market - See this LearnMoney article - Why you should always use a mortgage broker
• Always try and get a mortgage that has some real financial flexibility, meaning the ability to take payment holidays, make overpayments, payoff the loan early etc, for example -
• First time buyers often take out a 40 year mortgage (a mortgage is normally for around 25 years) so as to reduce the initial monthly payments. But as the years pass and they hopefully make more money they have a game plan to start making higher monthly payments, perhaps even refinancing the mortgage down to 20-25 years

Summary

Yes, first time buyers generally have a problems and the banks and building societies recognise this and so are bringing new flexible products to the market to try and help.

So if you’re a first time buyer and struggling to find enough money get talking with some family members alongside a few different mortgage brokers to see if anything can be worked out.

If you do this and get pro-active then you’ll find many of the roadblocks might start to disappear.

Good luck on getting on the property ladder!

Useful Info

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