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Mortgage rates for first time buyers

[ Posted April 13th, 2012 ]

Britain is a country that is certainly focused on the housing market, the decline in home prices, and the rising mortgage rates. In fact, when you consider how much air time the subject gets day to day on the news it is a surprise that anybody would actually want to become a first time home buyer.

With the stresses of the market you would think that young professionals would want to stay as far away from the housing market as possible and instead rent without half of the obligation.  Yet, they are still out there looking for great first time home buyers deals.

Of course, you have to bear in mind that most of these young professionals likely grew up in a home that their parents owned, thus owning a home seems more of a rite of passage than a business decision.

Regardless of their outlook, the tighter criterion for renting a home, lower LTVs, and larger mortgage rates mean that it is a bit harder to get up on the ladder. It used to be just income multipliers that decided if one was a good candidate for a mortgage, but now many major lenders judge mortgage applications based on ‘ability to pay.’

It used to be that first time buyers received better deals and the best mortgage rates simply based on the fact that they are not part of the mortgage chain market and therefore are fresh applicants. However, as the price of lending continues to increase and now high deposits are reasonable for keeping most out the market lenders have been forced to find other methods and schemes in order to help first time home buyers actually get back into the market.

Due to this fact, even with the poor economic conditions there is more flexibility being introduced for first time buyers into the market which is a very helpful factor. One adjustment that has been made is that many of the larger banks such as Halifax and Nationwide will extend mortgage terms for forty years instead of just 25 which will help make a loan more affordable.

Of course, in the long term borrowers will end up paying more unless they remortgage successfully, but this is a good way to at least get out into the mortgage market. Lenders also are offering new incentives to first time buyers including free valuation fees cash back, and legal fee assistance which are all great features to take advantage of.

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