First time buyers in the UK are struggling to purchase their first property, as documented by a number of studies. A number of schemes have been introduced in the UK to help first time buyers, such as the Help to Buy ISA, Help to Buy equity loan, and the mortgage guarantee scheme. However, all of these schemes require the buyer to have a deposit for a property. This means that even if you have an excellent track record of paying all of your commitments on time, you may still be unable to save for a deposit.
A new product has entered the market that allows first time buyers to purchase a property with zero deposit. There are no catches and guarantors required to obtain this mortgage.
Eligibility criteria
- All applicants must be first-time buyers.
- You must be 21 or older.
- You can’t have more than 5% of the purchase price in savings.
- You must have a good credit history and no missed payments in the last 6 months for any credit commitments. You can access a copy of your credit report here.
- The maximum loan amount £600,000
- You must have proof of paying your rent on time for at least 12 months. You can also apply if you are renting with someone else, as long as you are both applying for the mortgage.
- The property cannot be a new build flat or a property in Northern Ireland
Key points
- Up to 100% Loan to Value (LTV) mortgage for First Time buyers only
- You can put down a deposit up to a maximum of 4.99% of the purchase price
- The monthly mortgage payment must be equal to or lower than the average of the last 6 months of rent
- Maximum term of 35 years
- Maximum multiple of earnings of 4.75x
FAQ
Can four people who are renting together apply for a mortgage together?
- Yes. If four people are jointly renting a property, they can apply for the mortgage. All four incomes will be used for affordability, which can help you acquire a property which meets all of your needs.
Can we apply for a mortgage if we are renting separately but want to purchase together?
- Yes, if you both have history of renting separately, even if you have recently moved in together, it can all be considered. The main requirement to meet is each borrower must evidence they have meet rental payments for 12 months on their own.
- If you both rented separately for 6 months and collectively for 12 months. This would provide a 12 month history that would be acceptable for a mortgage application
What products are available?
- The only product available is a 5-year fixed rate with a current rate of 6.29% and no product fee. This ensures stability of your payments during the initial years of the mortgage
What are my options after my fixed rate ends?
- There are only a limited number of lenders who will accept more than two applicants for a mortgage. So if your mortgage and property is owned by 3-4 people, you may need to take a new standard product with the bank. The products available will depend on the LTV (Loan to Value) at the time. We can provide a detailed calculation to determine the balance remaining after the initial fixed rate. If the Loan to Value was on track to be 90% or less at the end of the fixed rate period, you would be able to re-mortgage to most lenders in the market.
Can I sell my home during the 5 year fixed rate?
- Yes, you can sell your home during this period. However, you will need to pay an exit fee, as is the case with most fixed rate mortgages. You can also apply to transfer the mortgage to your next residential home, and this would mean no redemption charges apply.
Contact Orton Financial today to learn more about this type of mortgage or find out if you are eligible. We offer a free consultation and can help you find the right mortgage for your needs.