We are bringing you more advice from the industry experts, this week I interviewed Martin Hirst of Martin Hirst Financial Consultancy, Moortown
With the media frenzy surrounding mortgages and house prices at the moment, many buyers are left not knowing which way to turn as the new ‘Help to buy scheme’ raises questions as to when is a good time to borrow and what the scheme means for buyers.
Martin gives us an overview of the options and explains what they mean for buyers
This scheme is in three forms
Option 1 – New Build
This was the Government’s first step into revitalising the housing market and is their best so far. You need a 5% deposit yourself and then the government will lend you 20% towards your deposit interest free for 5 years (after this term you pay back 3% of the capital per year). This 20% deal is negotiated through the builders. You then get a 75% loan in the normal fashion from a lender. As only a limited number of lenders operate this scheme in conjunction with the builders, there is still scope for shopping around.
Option 2 – Older Properties
This latest scheme involves the government providing a guarantee for 15% of the property value after you have paid a 5% deposit (which is similar to the old mortgage guarantee scheme but provided by the government instead of the borrower). Whilst it had an interest pick-up of 2,000 people in the first few weeks (with some of them invited to tea at David Cameron’s!), this really only provides the benefit that rates have been reduced on effectively 95% borrowing from an average rate of 5.99% to 4.99%. Again a limited number of lenders are involved so shopping around is important.
Option 3 – The Best One
Getting help from the bank of mum and dad (or aunts, grandparents, fairy godmother or anybody). If you can get some help to bring your borrowing down to the 75% mark, longer term fixed rates in the region of 3% are available. This massively reduces payments and enables people on repayment loans to pay off capital quickly.
Finally all these schemes are not magic and they all require a good status, income and credit rating. Given the previous subdued market conditions outside London and taking a 5 year view, this must feel a good time to buy for the longer term.
This article is written to provide an opinion and information only. It does not in any way constitute independent financial advice. To obtain independent financial or mortgage advice you should seek financial advice. Your home is at risk if you do not keep up repayments on your mortgage.
Thank you to Martin for his helpful advice, we recommend seeking independent financial advice before selecting a mortgage Martin Hirst Financial Consultancy would be happy to assist you with
Do you have anymore questions with regards to buying a house? Leave us a comment and we will be delighted to assist you or pop into our Leeds Road Rawdon or Stonegate Road North Leeds branch where our experienced staff will be delighted to talk you through any questions you might have