Last September, Two-year fixed rate mortgages were pegged at 1.49 per cent; Five-year fixed rate mortgages at 3.09 per cent; and Ten-year fixed rate mortgages at 3.99.
Fastforward to February 2015, and, boom! Banks now offer Two-year fixed rate mortgages at 1.10 per cent; Five-year fixed rate mortgages at 2.19 per cent; and Ten-year fixed rate mortgages at 2.89.
Some financial experts like Brian Murphy, of broker the Mortgage Advice Bureau, and Julie Croney, of mortgage broker JC Financial, agree that we haven’t seen the end of it. They expect more banks to offer more mortgages with more affordable rates, while a select few might even go below 1 per cent.
I can just hear the sigh of relief from a ton of first time home buyers out there!
Back when I was helping out my daugther buy her first house, there were already cheap mortgages available, but it took a while before my daughter acutally got a mortgage for her house because of 2 reasons: there were a lot of people trying to apply for a limited number of loans available, like what’s happening right now, and we we’re just unprepared for what’s out there.
We thought that having a deposit was enough to secure a green light from the banks we applied to. We were so wrong.
To help out many first-time buyers out there, I’m sharing some lessons that I picked up helping my daughter and her husband purchase their own home.
1. Report every pence you spend!
Every pence that goes out of your pocket, even those that go into your savings acount, must be accounted for. I’m not exagerrating. From old student loans, monthly credit card and utility bills, lenders want to know how much first time buyers can really borrow right now and afford to pay later every month.
They’re just strict with these things, since they want to guarantee if they can get a return from their investment.
In connection with this extensive accounting, prepare to find, sort, and arrange tons of paper work proving these expenses. That’s why start looking for six months worth of payslips, a P60, and other bank statements.
2. Be on time with your bills!
My daughter got the shock of her life when the banker, after examining her records, rejected her application because of delayed payments on her telephone bill!
What we didn’t know back then was that even one or two late payments could leave a black mark on your credit record for up to two years.
3. Study the mechanics
It’s a pretty basic rule for buyers that when you’re able to pay for a high deposit fee then you can qualify for a bigger first-time buyers’ mortgage. But what banks don’t reveal is that these cheap mortgages come with expensive application fees.
So aside from saving up for a deposit, you have to save a little extra for the application fee as well.
There are no-fee options available but your fix will be higher at 2.55 per cent. Fee-free deals tend to be good choices for people with more modest mortgages because on smaller loans the set-up costs matter more than the rate. Everyone is different, but if your mortgage is worth less than £100,000 then fee-free offers are likely to be more attractive.Tags: first time buyer mortgage, first time buyer mortgages, first time buyers, first time home buyer, firt time buyer