There is a common misconception at the moment that it is impossible to get an affordable mortgage: It is a myth.
This misconception has its origins in the worst of the recession – when times were very uncertain and the lenders began tightening their belts.
But that was at the height of the credit crunch and what many people don’t realise is that a lot has changed since then.
However, if you believe it’s hard to get a first time buyer mortgage, you’re not alone. A survey, commissioned by Halifax, discovered that it is currently a very common view:
The report, published this summer, found that 92% of the respondents thought it was hard for first time buyers to obtain a mortgage at the moment.
The perception seemed to be, amongst 84% of those surveyed, that banks do not want to engage with first time buyers – so there is little point in applying.
Yet, interestingly, those who had bought a home since the credit crunch in 2007 said it was ‘very easy’ for first time buyers to obtain a mortgage at the moment – many stated that it was easier than they had expected.
The Halifax report concluded that there are clear gaps between the perception of the mortgage market and the reality.
Perhaps a few years ago many doors were closed to first time buyers, but in the last two years or so lenders have been, albeit quietly, loosening their credit constrictions and, earlier this year, the Government introduced its NewBuy scheme.
Adam Champion is New Build Sales Director for The New Homes Group. He says the Halifax survey gave a very good overview of what was happening:
“The Halifax report was interesting – it clearly showed that the perception of mortgages was very different to what is actually on offer. Look at the Government’s NewBuy scheme, for example: Nearly 70% of those who apply for a NewBuy mortgage get one – and it’s not just for first time buyers, it’s for anyone buying a new build home.”
Adam says that when he explains to potential buyers what mortgages are on offer and works out the figures for them, the overwhelming reaction is one of disbelief:
“People have come to the conclusion, quite wrongly, that all mortgages require a 10% or 15% deposit. It’s not true. I tell them that it is 5% and at first they don’t believe me.”
The Halifax survey this summer reflected the same thing: It found that the most off putting thing – according to 67% of those who were asked – was the perceived large deposit they thought they’d have to pay.
But, as Adam explains, what they, and many other people don’t realise is that schemes are different for new build homes:
“You can get deals on new homes that aren’t available for second hand ones and that’s because they’re funded, in one way or another, by the building companies. Linden Homes, for example, has more schemes available than anyone else and offers a 95% mortgage; they work with half a dozen or so different lenders to set these mortgages up.”
Linden Homes’ St Bartholomew’s Grange is a case in point: It’s a great location, within walking distance of the centre of Newbury and built within the lovely grounds of the old St Bart’s School. The development is an intelligent mixture of new homes and refurbished properties. They are selling well, because they are beautifully designed and excellently located, but it may be that some potential buyers believe they can’t get a mortgage for one of these new homes – when the opposite is true:
Tina Chalk, Linden Homes’ marketing manager says people can get bombarded and overwhelmed by the sheer amount of mortgage information, facts and figures:
“I think that until people actually sit down and get their heads around the figures, they don’t realise how affordable some of the mortgages are: Linden Homes has lots of different schemes available to make it easier to buy homes like the ones at St Bartholomew’s. We work closely with specialist financial advisers “The New Homes Mortgage Helpline” and they can give you the facts and figures, but they’ll simplify them so you get a quote that is relevant to you. Essentially they can tell you how much you can spend on your new home, how much your mortgage will cost you every month and how much you’ll need in your piggy bank to start with.”
Adam Champion believes that one of the options available, the Government led NewBuy scheme, is increasingly gathering momentum – but says that another common misconception is that it is only for first time buyers:
“NewBuy is for everyone – as long as the value of the property being purchased is no more than £500,000. In fact 40% of NewBuy mortgages that have been offered since March have been for next time buyers who want to move up the property ladder.”
So what is Adam’s advice?
“If you’ve tried getting a mortgage before and failed, then try again. A lot has changed in the last two years or so. It’s worth talking to us and to Linden Homes to find out what is on offer now. Things really have changed so much.”
For more information about mortgages and other schemes, call the New Homes Mortgage Helpline on 01206 715415.
To find out more about St Bartholomew’s Grange in Newbury, visit Linden Homes’ sales and marketing suite on site, or call : 01635 521607.
For further information, contact Claire McCowan or Tracy Mannion at Remarkable Public Relations on 01962 893 893 or Claire.firstname.lastname@example.org
14 September 2012