Any First time buyers with a spare £31,500!

08/03/2011

Know any newly-weds with a spare £31,500?

In 2007 the typical deposit required for first time buyers was £12,700 – not an insignificant amount of money but not unrealistic. However, recently released figures from the Council of Mortgage Lenders reveal that by the second half of 2010 the typical deposit required for a first time buyer has risen to a very significant £31,500.

So with £31,500 needed to be able to buy that all important first family home and average wedding costs delivering a wallet battering £20,000 will little Johnny and Sarah be able to marry and buy their own place before middle age kicks in? The average groom is now almost 37 years old, the bride nearly 34 and the average first time buyer now stands at 37 years old.

Is there an answer for first time buyers?

Michael Coogan, the CML's director-general, says that while mortgage insurance, shared ownership and product innovation could all play a part in improving the mortgage market, there was no "magic bullet" that would normalise it, returning to a normal market was likely to be a gradual process, as confidence in funding markets and lending decisions was gradually restored.

So what options have you as a first time buyer?

If you don't mind a new-build home, a number of developers are offering incentives and mortgages at higher Loan to Values (LTV’s) than you could normally achieve.  These developers team up with lenders to provide mortgages of around 90% – 95% of the purchase price of the property.

Some other lenders may offer mortgage deals with similar LTVs, however some will require an additional insurance policy which protects the lender against any default, other deals may require a guarantor or a legal charge over savings, perhaps those of a close relative, which may need to be placed with the lender.

Paul Nevin – Principal and Business Development at Census Financial Planning