Thank you all very much for attending the most recent session at South Norwood Community Hub on the 25th May 2024 hope you found the information useful. Welcome to the new attendees please continue to spread the word, knowledge is power.
Sharing is Caring: A Special Thanks to Cherelle who highlighted the issue of first-time buyers and shared some beneficial information for first-time buyers.
This is certainly good news for all first-time buyers!
Challenges and Support for First-Time Buyers
Many first-time buyers face significant obstacles, especially in raising the deposit. About 34% of first-time buyers receive parental help: 24% get loans from parents, and 10% receive financial gifts. Generational wealth often begins with homeownership, providing stability, equity, and a foundation for financial security. By addressing disparities and promoting equitable access to homeownership, we can build stronger communities.
Generational wealth often begins with homeownership, as it provides stability, equity, and a foundation for financial security. By addressing disparities and promoting equitable access to homeownership, we can work toward building stronger communities and closing these gaps.
Understanding Black Homeownership Statistics
In the United Kingdom:
- Between 2016 and 2018, 63% of households in England owned their homes.
- 68% of White British households were homeowners.
- Black African households had a homeownership rate of 20%.
- Arab households had a rate of 17%, among the lowest in most regions except the North East.
Learn more
However, there are several options available to help first-time buyers achieve their homeownership dreams:
Options for First-Time Buyers
**95% Mortgages**: These require only a 5% deposit and are available from:
- Coventry Building Society
- Skipton Building Society
- Accord Mortgages
- Bank of Ireland UK
A government scheme introduced in April 2024 supports 95% mortgages, with major banks like Lloyds, NatWest, Santander, Barclays, and HSBC are participating
**Help-to-Buy Scheme**: This scheme supports first-time buyers purchasing newly built properties.
**New Mortgage Deals**:
A new Mortgage is being launched by the Yorkshire Building Society. It is a fee-free deal that will help first-time buyers across the whole of the UK. A brand new £5,000 deposit mortgage has been launched by a building society, enabling aspiring homeowners to potentially borrow up to 99 per cent of the property value, with a deposit as low as £5,000. This scheme is exclusively for first-time buyers and could assist you with getting your foot on the property ladder sooner rather than later. You can borrow between £95,001 and £495,000 if you meet the following criteria:
- Minimum deposit: £5,000
- Maximum property value: £500,000
- Maximum loan-to-value: 99%
- Not available for flats or newly built houses
- Not available in Northern Ireland
For more information, visit: [The 5k Deposit Mortgage | 99% Mortgage | YBS]
For more information, use the link below:
The 5k Deposit Mortgage | 99% Mortgage | YBS
**Saving for your mortgage deposit?**
They also offer a brand new savings account, First Home eSaver, designed for first-time buyers. The account can be opened with just £1 and you can save up to £500.00 per month for two years, with one withdrawal per year.
The eligibility criteria are listed below:
- You have to be at least 16 years old and a UK resident to open the account. The account can be held on your own or jointly with someone else. The account cannot be opened in Trust.
- You can only hold one First Home eSaver or First Home Saver account in your name. For joint accounts, you can only be the Main Holder on one account but can be the Other Holder on the second account.
- If you are named as the Main Holder on more than one First Home eSaver account, the most recent account opened will be transferred to the Internet Saver Plus Issue
- You can only hold a First Home eSaver account if you are saving towards owning your first home.
If you are renting, Skipton Building Society is offering a Track Record mortgage for renters.
**What is Track Record Mortgage?**
- A mortgage for renters.
- They use your track record of paying rent to work out what you may be able to borrow.
- Fixed rate for 5 years.
- No deposit is needed.
- No completion fee.
**Who can apply?**
- You haven't owned a property in the UK in the last 3 years.
- You are aged 21 or over.
- You have had no missed payments on debts/credit commitments in the last 6 months.
- You want to borrow up to £600,000.
- You're not looking to buy a new build flat.
- You're not looking to buy a property in Northern Ireland.
Sole applicants:
- You've paid all rent for 12 months in a row, within the last 18 months. We may also want to see proof of payments of household bills.
Joint applicants (up to 4 people):
- You can prove that all rent has been paid either by one applicant or collectively for 12 months in a row, within the last 18 months.
- If you've been renting separately, you can prove that you have paid all your rent.
- In either case, they may also want to see proof of payments of household bills.
For more information, visit [Track Record Mortgage - Skipton Building Society Track Record Mortgage - Skipton Building Society
**Barclays Bank Family Springboard Mortgage**
Barclays also offers the Family Springboard Mortgage which allows you to buy your home with help from a loved one. This means that you can use your family or friend’s savings to buy your own house with your own mortgage – and they’ll get their money back, with interest. You can borrow the full purchase price of your home because your family member/friend provides 10% as security for five years. You could also borrow over 35 years, which means that paying over a longer term could help make mortgage repayments more affordable for you as the repayments will be lower.
Barclays will lend up to 4.49 times your income if you earn more than £50,000, whether a single or combined income. If you earn less than £50,000, you can borrow up to 4 times your income.
For example, if you and a partner have a combined income of £60,000, you can borrow £269,400 (60,000 x 4.49 = 269,400).
If you earn £40,000, you could borrow £160,000 (40,000 x 4 = 160,000).
For more information, please visit [Family Springboard Mortgage | No borrower deposit | Barclays] Family Springboard Mortgage | No borrower deposit | Barclays
This is just an example of the schemes that are currently available. Do your research and begin planning your future. It is important to look at all your options if you are considering homeownership, and planning is key. Look at what mortgages are available to you based on your income before you begin making your plans.
How to Be Mortgage Ready:
Buying a home is one of the most significant financial commitments you'll ever make. Ensuring you're mortgage-ready can save you time, money, and stress. Here’s a step-by-step guide to help you prepare for this important milestone.
- Check Your Credit Score
Your credit score is a crucial factor in determining your mortgage eligibility and interest rate. Here's how to ensure your credit score is in good shape:
- Obtain Your Credit Report: Get a free copy of your credit report from major credit bureaus (Experian, Equifax, and TransUnion).
- Review for Errors: Check for any errors or discrepancies and dispute them if necessary.
- Improve Your Score: Pay off outstanding debts, keep credit card balances low, and avoid opening new credit accounts.
- Determine Your Budget
Knowing how much you can afford will help you narrow down your home search and prevent financial strain.
- Calculate how much you are able to obtain by using on-line mortgage calculators.
- Consider All Expenses: Include property taxes, insurance, maintenance, and utilities in your budget.
- Save for a Deposit
A substantial down payment can improve your chances of securing a mortgage and lower your monthly payments.
- Set a Savings Goal
- Automate Savings: Set up standing orders to transfer money to your savings account consistently.
- Gather Financial Documents
Lenders will require various documents to assess your financial stability and ability to repay the mortgage.
- Proof of income: e.g Recent pay slips, tax returns.
- Financial Information: Bank statements, savings etc.
- Debt Information: Documentation of current debts, including credit cards, and car loans etc.
- Get Pre-Approved for a Mortgage
Pre-approval gives you a clear idea of how much you can borrow and shows sellers that you're a serious buyer.
- Shop Around: Compare mortgage lenders to find the best rates and terms.
- Submit Application: Provide the necessary documents and complete the pre-approval application.
- Understand Your Pre-Approval Letter: Know the terms, conditions, and validity period of your pre-approval.
- Understand Different Mortgage Options
Choose a mortgage that fits your financial situation and long-term goals.
- Fixed-Rate vs. Variable-Rate Mortgages: Fixed-rate mortgages have a stable interest rate, while Variable rates have a rate that can change over time.
- look at the various schemes e.g. first Homes Schemes First Homes scheme: first-time buyer's guide: Overview - GOV.UK (www.gov.uk)
- Loan Term: Decide between a 15-year or 30-year mortgage, considering the impact on your monthly payments and total interest paid.
- Avoid Major Financial Changes
Lenders prefer stability, so avoid making significant financial changes before applying your mortgage.
- Do Not Change Jobs: Maintain your current employment status.
- Avoid Large Purchases: Hold off on buying a car or making other large purchases that could affect your debt-to-income ratio.
- Refrain from Opening New Credit Accounts: New credit searches can lower your credit score.
- Prepare for additional Costs
In addition to your deposit payment, you’ll need to cover , which can be 2-5% of the home’s purchase price.
- Save Extra Funds: Set aside money specifically for closing costs.
- Understand What’s Included: Additional costs typically include fees for the loan, survey costs etc.
Final Thoughts
Being mortgage-ready involves careful planning and financial preparation. By taking the steps outlined above, you can position yourself as a strong mortgage candidate and move confidently towards homeownership. Remember, the more prepared you are, the smoother the home-buying process will be. Happy house hunting!
‘Without goals, and plans to reach them, you are like a ship that has set sail with no destination.’
Fitzhugh Dodson
2 Comments
Due to taking a vacation, I was not able to attend the latest session. However, the information provided in this latest blog is so detailed, I don’t think I’ve missed much!
Thank you Janet for continuing to provide what the community need.
Shakira
Thanks so much your comments are appreciated!