Why now is the best time to be a first-time buyer – and how you can afford to do it
Interest rates on first-time buyers mortgages have fallen
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NOW is the perfect time for first-time buyers to make that first step onto the property ladder thanks to cheap borrowing and slow house price growth.
Interest rates on a whopping 95 per cent of the top deals that require just a 5 per cent deposit have fallen, according to experts at financial analyst Defaqto.
A year ago the average interest rate on a two-year fixed-rate mortgage with a 5 per cent deposit was 3.95 per cent while today it is 3.23 per cent.
These mortgages are typically used by first-time buyers to get on the housing ladder because they require a small deposit with people borrowing the remaining 95 per cent.
Meanwhile, the number of properties coming onto the market has fallen for the past eight months consecutively, according to the latest figures from the Royal Institution of Chartered Surveyors (RICS).
Defaqto says this means first-time buyers with a mortgage in place and no property chain are in the prime position to snap up homes for sale.
He said: “Lenders are being more innovative when it comes to schemes aimed at first-time buyers such as joint borrower, sole proprietor mortgages.
"This is where you buy with a parent who goes on the mortgage but only you go on the deeds so that you can benefit from the parent’s income to get a bigger mortgage but also don’t miss out on stamp duty exemptions.
"Or Lloyds' Lend a Hand and Barclays' Family Springboard mortgages where parents offset savings against your mortgage so you don’t need a deposit, but they get their money back at a later date.”
Often, hopeful home buyers forget about stamp duty - but consumer group Which? has a useful
Meanwhile, for super savers comparison service MoneySuperMarket provides a helpful
He said: “Help to Buy is like the crack cocaine of the housing market. It is something we got addicted to, it’s bad news. It jacks up house prices.
"It was a very good idea at the time – it gave lenders confidence to lend more money without demanding buyers stump up a significant deposit.
"The problem is that you end up with a new build which has a new build premium of roughly 10 per cent. Once you have slept in it, it is worth 10 per cent less.
"When you want to move on or pay off the equity loan element the Government now has, the people you will be selling to won’t have the benefit of Help to Buy - how are they going to be able to pay the price you did? They won’t.
You can boost your credit score by being on the .
Check past addresses and relationships on your file - if you’re financially linked to a former partner, for example you held a joint bank account with an old flat mate where you may have been jointly named on the utilities bills, their credit rating can impact on yours unless you’ve de-linked yourself.
Stay out of your overdraft - some lenders may not tolerate you being in your overdraft at all in the last three months before you apply for a mortgage.
Close unused credit cards - available but unused credit available can be seen as a negative, as you could borrow large amounts on a whim without passing another credit check.
Apply for a credit card if you don’t have a credit score. Be careful, though: set up a direct debit to clear the balance in full each month.
To decide what mortgage to get use websites such as and to find the best deals. You should also consider a free-to-use whole or market mortgage broker.
An extra £100 can secure a mortgage - putting down 0.1% per cent more than the minimum deposit can boost your acceptability, or cut the amount of documentation the lender wants to see.
Mr Harris said: “Do not overstretch yourself. Be realistic about your budget and how much money you need to live on.
"It may be tempting to put all your savings into the property and take on the biggest mortgage possible but you still need to live each month.”
Mr Pryor added: “Don’t fall for what lenders and your parents’ generation are telling you – that you must own your own home.
"The word mortgage comes from the French word for death – mort – that’s how serious this is. Nobody should be rushing into it without carefully considering what the implications are.”
Here's why MoneySavingExpert.com founder Martin Lewis reveals why now is the time to fix your mortgage and save £1000’s.
Plus, here are the 10 reasons why you might be rejected for a mortgage – and how to increase your chances of getting accepted.
And these are the £120,000 homes first-time buyers can afford WITHOUT putting down a deposit.
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