First time buyer?
Are you looking to purchase your first home, but don’t understand how mortgages work? According to a Bank of Scotland study carried out last month, a quarter (25%) of young Scots aged 18 to 34 said a lack of financial knowledge is a key barrier to home ownership.
The study showed that 39% of young people in Scotland were unable to confidently outline the mortgage process and that the key barriers for home ownership was affordability (73%), saving for a deposit (62%) and finding a suitable home (34%).
Half of all 18 to 34-year-olds either rent from a private landlord, while 34% rent from a private landlord, 16% life with their parents and 21% live in a mortgaged home.
A quarter of those who live with their parents are doing so by choice whilst three quarters are only at home because they have no other option and cannot afford to move out. Some young people anticipate that inheritance will help them release their home ownership ambitions but 11% believe they will never be able to afford their own home.
Younger people who plan to purchase their own home believe they will achieve this by the time they are 31 – the average first time buyer in Scotland is 30 years old according to Halifax.
The research also found that young Scots aren’t financially confident when it comes to understanding how mortgages work, and this gap in their knowledge is causing them to delay their home ownership dreams.With that in mind, here’s a brief guide to give you some tips to help you secure a mortgage.
Finding a high loan to value mortgage
Although the pandemic meant that many lenders withdrew many mortgage products, we have seen the reintroduction of some great deals with low rates making home ownership much more affordable and accessible for first time buyers. There are plenty of 90 or even 95% mortgages available but it’s essential that you can afford the repayments. Talk to a mortgage broker who can search the whole of the market to find the best deal and to explain how the application process works. You could also discuss a guarantor mortgage whereby your parents or grandparents will secure your mortgage against their home or put their money into a fixed-term account.
Mortgage Guarantee Scheme
The mortgage guarantee scheme is a 95% loan to value (LTV) mortgage scheme to help buyers with a 5% deposit. Under the scheme, buyers can purchase a property priced up to £600,000 and it is open to everyone, not just those who are buying their first home and never had a mortgage before – as was the limitation for the Help to Buy Scheme.
With house prices rising since the housing market reopened at the end of June at an unprecedented rate – due to the stamp duty holiday and a re-evaluation of buyers’ priorities – buying at a fixed price means you aren’t being priced out of the market. The price you see is the price you pay with no closing dates, offers over or paying over the odds due to high competition for the same property. In addition, there are often house builders incentives such as free fixtures and fittings, stamp duty bills and legal fees.
Ensure your credit rating is in order
It’s important that you have a good credit score so that you can obtain a good rate on your mortgage – the lower the score the lower risk you are considered to be by the lender, and the deals available to you will be limited. Check your credit score before you look to buy a property to give you time to improve this.
A larger deposit
If you can gather together a larger deposit to put towards the cost of your mortgage it will keep your outgoings down and open up betresr rate mortgages. Ideally you want to have 15% deposit to get the best possible deal.
New release Pollokshaws Living
The long awaited collection of high quality one and two-bedroom apartments starting from £160,995 will be released from Thursday 16th September. Our last release sold in a matter of days, and we anticipate high demand for these homes.
Pollokshaws Living is within an easy commute of Glasgow city centre and Pollokshaws West train station is very close to the development. The M77 motorway is within a five-minute drive, as is Silverburn Shopping Centre. The development is next to a range of amenities and Pollok Park, which provides the perfect escape from city life. Nearby Shawlands has a host of bars, restaurants, independent shops, boutiques and health and sports facilities.