by Mark Johnston
As a first time buyer, you need to consider all variables involved in purchasing a house. There are legal fees, stealth taxes like Stamp Duty and removal van costs and of course, you have your deposit to consider. These can mount up and sometimes lead to administration costs of £10,000, seriously eating into any cash you may have accumulated for a deposit.
Building insurance, home content insurance, refurbishment costs, boiler repair or boiler insurance etc are all charges that you will need to consider after you have bought you first house too. Don’t over stretch your budget. Take heed on this point as we have recently written about soaring debt and increases in repossessions due to faltering mortgage payments. Think about buying a house in an area that has the space you require and make sure it’s affordable in terms of fluctuating interest rates and variable mortgage rates.
Consider all help out there. Check with your local council to see if they take part in any of the help for first time buyer schemes. Consider approaching your family and friends to help out with you deposit, they might consider helping you out with a small kick back. Helpfully Nationwide has launched a new savings account designed to offer first time buyers a new type of savings account that could help them get a loan with just a 5 per cent deposit.
The product is called a Save to Buy Deal and uses the savings account platform to offer the saver better loan offers in the future. Users of this account would be expected to make regular payments into the account and after a period of time they could be offered better deals, usually only deals reserved for long standing mortgage customers.
Savers can open this account with as little as £50 and are expected to commit to at least 6 months of regular payments. Customers are offered an interest rate of 2.5 per cent gross per annum, only applicable on balances up to £20,000 and customers are given a payment break of three months over a rolling 12 month period. Handy at Christmas or in the January fall out. The account should be maintained for at least 6 months before they can apply for a mortgage deal. This could include the Nationwide 95 per cent loan to value rate or any of the other first time buyer rates and deals.
Why is this a good idea. It provides not just a formal platform to save, first time buyers should be saving anyway, but it allows the saver the option to select some deals and mortgage rates that are not usually offered to first time buyers. Application to this account is simple but there is no guarantee of mortgage application success.
Story link - Nationwide 95% Mortgage
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