Mortgages difficult to access for first time buyers without huge savings


The financial gap between the rich and the poor has been highlighted in a report regarding mortgages. First time buyers could be paying a record £2,800 per year extra as a result of only being able to put down a small deposit.
People who can afford larger deposits when taking out a mortgage usually have the benefit of lower interest rates. This is because the banks see them as lower risk, seeing as they have already paid off a more substantial amount of the total property value.
People who can only afford smaller deposits, such as 5 per cent deposits, are likely to have their options limited to higher interest rate mortgages.
The report in the Telegraph says that those with a five per cent deposit can be offered a mortgage with a 5.27 per cent interest rate. In comparison, those with the ability to pay a 35 per cent deposit can get offered a mortgage with less than 2.5 per cent interest.
This works out, on a property valued at £150,000, at an extra £2,772 a year for the person with the lower deposit.
Unfortunately, those who can afford a 35 per cent loan to value mortgage are likely to be able to afford the higher interest rates, and those with the five per cent will be less likely to.
Although this is just an example, it highlights the differences between the rich and poor in the property market, a market that is already excluding those on low wages, and stranding the 2 million young or so people living with their parents, as research by the charity Shelter found to be the case this year.
Despite schemes like Help to Buy, it is still majorly difficult for first time buyers to purchase their first property, especially if they are on incomes which don’t allow them to make substantial savings.

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Finding the best mortgage advisers in your area is easy. Whether you're looking for buy to let, a residential mortgage, or a commercial loan, just enter your location into the form and answer a few questions. Then sit back and let the backend system do all the legwork to put you in touch with independent mortgage advisers near you!

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