by Mark Johnston
Help in Buying a Home in 2013.
Before the housing market crashed a few years ago, home loans were readily available to most borrowers which included the self employed and those without any kind of a deposit, this is currently not the case.
However, in 2012 more than 600,000 homes were bought in the UK and many lenders have indicated that they intend to make more loans available throughout 2013.
In the current climate most lenders require at least at 15 per cent deposit, but there are still a few products around that are aimed at those with a smaller deposits.
David Hollingworth, director of mortgage broker London and Country, stated “the bigger your deposit, the better your chance of getting a mortgage and the lower the rates on offer”.
Therefore the more a potential buyer can save, the better position they will be in. This can be difficult especially with rising rents, but house prices at present are going sideways so any borrower saving for a deposit may not be falling behind by delaying purchases.
Some property experts believe that if house prices do remain in limbo as they are at the moment or even if they fall further many buyers could potentially benefit.
Lenders now use an affordability calculator to decide how much someone can borrow rather than multiplying their income by 3 or 4 times like they use to. So if a potential borrower has a lot of debt or financial commitments it will affect the amount they can borrow.
So whilst saving for a decent deposit it is also wise for potential borrowers to try where possible to reduce other debts they may have acquired over the years.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said “reduce any debt you have to maximise the amount you can borrow”.
Those looking to apply for a mortgage should not only repay balances on credit cards, they should also make sure they cancel them as well, so this borrowing is not still recorded as ‘live’ on their credit record.
Most of the competition in the mortgage market is at lower loan to value levels, typically around 60 per cent. Although in recent months there have been some signs of life in the 95 per cent loan to value market.
Many lenders having been slashing their mortgage rates, mainly due to the funding for lending scheme, however the fees associated with these mortgages appear to have risen sharply at the same time.
Mortgage experts believe that it can sometimes make sense to pay a higher fee if it entitles the borrower to a cheap mortgage rate, this is however as long as they are looking to borrow a significant amount.
Therefore those borrowers wanting a relatively small loan it may be better to opt for a low or free fee deal.
With all this information in mind all borrowers such visit comparison and information websites in order to find out what loans are available, what rates are on offer and what fees come with what products.
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