The last few years have seen an absolute drought of first time buyer mortgages. Not so long ago, before 2008, there were so many first time buyer mortgages to choose from. There were high LTV mortgages which allowed them to borrow up to 130% of the purchase value of the property, shared equity mortgages, also mortgages for shared ownership, joint ownership, rent-a-room, and family off-set mortgages – any number of different types – the list is endless. At that time, when the market was on the up, there was no shortgage of mortgages for aspiring home-owners and there seemed to be no lack of desire for the lenders to lend.
Since then, the property market has seen a sharp devaluation – not so much of a crash but certainly a reassessment and property values have steadily decreased until about 2019 when they stabilised. Since about 2007, the market for first time buyer mortgages has all but disappeared. Poor old new-comers have been finding that when they have come to make an application for a first time buyer mortgage, that they have either been required to come up with a massive deposit of up to 40% or they have provided less of a deposit but been penalised in the charges levied in terms of interest.
The biggest hurdle faced by those wanting to take that first step onto the property ladder has been the deposit. Whilst some of them have managed to save, others have found it just too hard. They’ve either had to stay put or they’ve gone pleading to grandparents or parents for a gift or to match savings they have made. Typically these days, about half of wannabe home-buyers have tapped their parents for the deposit. Clearly this isn’t always possible and has led to a division in first home buyers between those from families who can provide the bulk of the deposit and those who can’t
To try and bring down the amount of deposit a first home buyer has had to save, the government exempted them from stamp duty on properties worth up to £250,000 until 24th March 2019 and has also launched a number of schemes and asssociated first time buyer mortgages allowing some hope.
With first time buyer mortgages such as the shared equity mortgage, the mortgage indemnity insurance scheme and shared ownershi, along with some private first time buyer mortgages such as the Lloyds Lend-a-Hand scheme, first home buyers can now access the market – on new build homes only though, with only a 4 or 5 % deposit.