Which first mortgage for first time buyers?
Author: Rami Article source: http://www.articledeshboard.com/. Used with author's permission.
The perennial dilemma for the first-time home buyer is how to decide what deal is best for them, an issue which largely depends on personal circumstances.
First time buyers will find that the best first mortgages are ones which correspond to their particular lifestyle and circumstances.
For example, it has been pointed out that interest-only mortgages can be a particularly good choice for young professionals.
Alexander Hall has suggested that, despite recent price increases, the number of people using interest-only repayments on their mortgage is not an alarming development for the market.
Questioned about the increase in the number of people opting for this kind of deal, Andy Pratt, chief operations manager of Alexander Hall, said he did not think that around a quarter or even 30 per cent was an "extreme position for the market", and that the figure would probably settle somewhere between the two figures.
According to Mr Pratt, circumstances play a key role in choosing a mortgage such as this.
"If, for example, an individual was looking to move down to London to start a career, stay in London for three years and then move somewhere else, depending on how they view property prices then even a gradual or moderate increase in property prices could lead people to the calculation that an interest-only mortgage can work to their advantage," he said
If a first time buyer knows that they are embarking on a career which initially offers a limited salary but is likely to incorporate increases further on they are essentially faced with a choice.
A homeowner can either move to a different part of the country to obtain a better salary or, as is the case with this kind of mortgage, lump sums of the mortgage can be paid off as bonuses and pay rises start to come through.
Many buyers now feel knowledgeable and confident about paying the interest and controlling for themselves how much of the loan they pay off by doing so in lump sums every two or three years, rather than have dictating the repayments, according to Alexander Hall.
While, this does not necessarily mean that they will be guaranteed to come out on top in terms of beating the lender and interest rate, it does offer more control to the buyer given that they know they can do whatever they prefer payment-wise.
However, it has been suggested that the best mortgage option for first time buyers may be to stay away from the biggest lenders as they continue to struggle with the credit crunch.
Smaller lenders such as Melton Mowbray Building Society, The Kent Reliance Building society, The Cheshire Building Society, are "very tiny compared to the HBOS's of this world," said the group.
Commenting on the issue, Helen Adams, Managing Director of First Rung Now said: " It is certainly worth trying for the smaller lenders, however you will need to move quickly as availability is limited through limited funds and certainly building societies have got very strict regulatory rules on how much they can lend and under what circumstances."
Once the small lenders run out of allocated funds for lending then obtaining a first time buyers mortgage will be difficult. Early birds will get the worm!
Rami Nseir likes to write articles in his free time for First Rung Now a leading mortgage advice and comparison website for first time home buyers
Powered by CommonSense CMS script - http://www.sensesites.com/
|
Print this page