Buying your first house? The two most asked questions, answered.

By John Cossons, Mortgage and Protection Designer with Anstee & Co.

The two questions that we are asked most by people buying their first house are-

Can you buy a property with a 5% deposit?

Yes, on any property that is not a New Build you can have a 5% deposit and borrow 95%. A new build with most lenders is any property up to two years old, but some are alright after one year.

Yes, on a new build with the Help to Buy equity loan scheme. There are limitations to this and in the East Midlands, the maximum property price eligible for a Help to Buy equity loan is £261,900. In other areas of the country, this amount may differ. In this instance, a new build is just that, a newly built or converted property. The builder or developer must be registered with the HTB scheme.

Yes, on a new build with the Deposit Unlock scheme. There are also limitations to this, the builder must be offering this on the development, not all builders offer this and those that do, don’t offer it on all developments. You are also currently restricted to borrowing from one of two lenders, such as The Nationwide, or the Newcastle Building Society.

No, on any property that falls between the cracks between being new and over two years old you will need a minimum of a 10% deposit for a house and a 15% for a flat.

Can my parents or someone else help me?

Yes, they can help with the deposit and the affordability.

Firstly the Deposit.

Parents or other family members can gift you all or part of the deposit. This must be a gift and they will need to confirm that they do not expect to receive either the money back or any repayments. There may be restrictions depending on the source of the funds, if the funds are in a UK bank account or from a remortgage or loan this is acceptable, but funds from abroad may not be, depending on the circumstances, additional proof may be required for this.

There are a couple of lenders who have deposit schemes where the gifted deposit is secured in a savings account with the lender to be used in the event of mortgage default. An example of this is the Barclays Springboard Mortgage where the donor must deposit 10% of the property value into a Barclays savings account, where they will receive interest. The money will be tied to this account for 5 years and then released back to the donor. The borrower can then borrow up to 100% of the property price.

About Affordability.

Having the required deposit is only part of the mortgage challenge for first-time buyers, or anyone else. The lenders are required to lend responsibly and cannot lend more than a person can comfortably afford to repay if interest rates were to rise. To check that they are doing this all lenders use affordability calculations based on several factors including, income, outgoings and the terms of the loan. If there are two applicants both incomes and outgoings are assessed.

If the loan is unaffordable on your own, or with a partner, some lenders will allow a third or even fourth applicant. The joint borrower would probably not want to be a registered owner of the property, so a scheme known as, “Joint borrower – Sole Proprietor” is used. The income, and outgoings, of the joint borrower, are used to boost the income of the purchaser, but the property is registered in just the primary applicant’s name or names. If the loan goes into default all parties are responsible. The loan is not secured against the joint borrower’s property so their home is safe, but their credit rating would be affected.

How Anstee & Co. can help you with buying your first house.

We are independent mortgage brokers. This means that the mortgage advice we offer is unbiased. We will look at all the options available to you to ensure you get the mortgage deal that is right for you. We would welcome the opportunity to have a coffee with you and discuss how we can provide the advice and help required.

If you want to find out more about “Buying your first house” or wish to review your existing mortgage, then why not contact us.

Our offices are located at-

• Kettering, Northamptonshire
• Stamford, Lincolnshire
• Towcester, Northamptonshire
• London, Greater London

We make full use of video conferencing facilities such as-

• Zoom
• Microsoft Teams
• Skype
• Facetime

Additionally, we can also arrange a conference telephone call. There is no need to visit an office as all work can be handled remotely.

So, if you have any thoughts or comments on this article, “Buying your first house? The two most asked questions, answered.”, then we would love to hear from you.

Finally, the information contained in this article is for information purposes only and does not constitute advice. No action should be taken based on this information alone. Anstee & Co. is authorised and regulated by the Financial Conduct Authority (FCA).

AS A MORTGAGE IS SECURED AGAINST YOUR HOME, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.