If you’re a first-time buyer in today’s property market, you may be wondering how you’ll secure a mortgage. Many lenders offer options for first-time buyers that are designed to make the mortgage qualification process potentially simpler.
A mortgage is likely the largest single purchase you’ll ever make and one of the biggest investments you’ll ever make. Luckily, it’s also one of the easiest. Taking a few simple steps will help you establish your credit and aid the qualification for a mortgage.
Here are mortgage options for first-time buyers that you might know:
1. Family Gifting Deposit
Many banks offer gift options available to first-time homebuyers. Family can fund the required deposit on behalf of the buyer. This also has the benefit freeing up money to use on other fees, such as closing costs.
Lenders will typically charge a slightly higher interest rate for this option, but it can help you obtain deposit money which may have been out of reach.
2. Guarantor Mortgages
First-time buyers with little or no credit can apply for a guarantor mortgage. This obliges a parent or other family members to pay the mortgage if the borrower gets into financial difficulty and cannot make the payments therefore providing some additional security for the lender.
3. Personal Loan as a Deposit
Some first-time buyers may, in limited circumstances be able to take out a personal loan with the same bank where they’d like to apply for a mortgage. They then use that money to pay for the deposit.
This can be an option for buyers who have a very good credit rating and require a large deposit and don’t have enough savings to cover the deposit.
4. Mortgages that require no deposit
There is a lender that offers a product that requires no deposit on behalf of the borrower. However a family member known as the helper will pay 10% of the property purchase price from their savings. If the borrower keeps up the mortgage repayments then the helper, after 5 years will get their savings back with interest.
Do note that the helper needs to show they have taken independent legal advice before the mortgage can begin.
Conclusion
Contrary to popular belief, first-time buyers may not need a large deposit to buy a home. Many banks offer mortgage options for first-time buyers that make it easier to secure a mortgage and put you on the right path to aid you into owning your first home.
These options can help you find the home you want and get the financing you need.
If you are looking for the best mortgage brokers to help you, book a free consultation with one of our advisers. We can advise on a wide range of mortgage products and can help you get the best deal to suit your individual needs. Contact us today!
As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.