The mortgage market has not exactly started with a bang this New Year, but there is a certain glimmer of hope on the horizon.
The Guardian newspaper reported that several mortgage providers are “heralding the arrival of better conditions for first-time buyers alongside the launch of several new mortgage products designed to help those struggling to get a foothold on the housing ladder”.
These new mortgage products offered by Halifax, Newcastle Building Society (NBS) and HSBC respectively seem to offer some help for struggling first time buyers. That help may come in the form of a waiving of mortgage arrangement fees, conveyancing costs and valuation fees, fixed rates and low loan to value deals, depending on the lender involved.
These new mortgage products were launched with a great deal of optimistic publicity about how each company is keen to support struggling first time buyers. While the sentiments behind these statements of support are worthwhile, make sure that if you are first time buyer looking for a mortgage that you don’t take these products at face value.
For example the new first time buyer mortgage being offered by Halifax at a 5.79% rate (not the cheapest on the market) is only available if the first-time buyer has a Halifax current account into which they pay £1,000 or more each month or those who hold an Ultimate Reward Current Account. It may be that the deal even with its provisos is ideal for some first time buyers, but there may be better deals out there for your circumstances.
Northfields always recommends using a good independent mortgage broker who will be able to look across the whole mortgage market and select the best deal for you. Independent brokers also often have access to deals that are not available on the high street, so when you see these deals being publicised in the media it is important to check that there isn’t in fact a better product out there that may not be getting the same hype.
An independent broker may point out to you that Yorkshire Building Society already offers a first-time buyer deal at 5.79% (the same rate as the new Halifax product) with no fee, free valuation, free legal work and £500 cashback. And no need to open a current account.
Even though these new mortgage deals may not be without their flaws it is encouraging to see some product launches early in the year aimed at giving a boost to the first-time buyer market, particularly as first time buyers underpin the whole of the housing market and facilitate chain building.
However, it is unlikely that these early announcements of new mortgages are a sign of a complete turnaround in lending criteria. The good news is that a bit more competition in the first time buyer market should go some way toward improving the rates on offer. What is unlikely to change in 2011 is the tiering of rates dependent on the level of deposit that a first time buyer can put down.
If you are thinking about making your first step onto the property ladder, make sure that you have the best deal available. Treat choosing a mortgage like buying car insurance – you would never go with the first quotation you were given, you would comparison shop. So if you already spoke to your bank about a mortgage, make sure you get at least three quotations from brokers who are independent.
Independent status is key to ensure that the broker is not tied to recommending only the products offered by a single lender. You want a broker that can look at all lenders to find that diamond in the rough – a mortgage product that may not have the shimmer and shine of fancy publicity, but has the best cut and clarity for you.