We’re constantly hearing that moving out and getting on to the property ladder is becoming more and more difficult and that the average age of first-time buyers is ever-rising. While these figures don’t lie, they create an element of fear and false assumptions that puts people off even thinking about getting a mortgage. For many, it really doesn’t have to be this way!
Mortgage lenders currently require a minimum 10% deposit on houses and flats which we understand can take a long time to save and for some this is, unfortunately, not a realistic target. This blog post speaks to those who can achieve this and subsequently benefit from getting a foot on the property ladder. Mortgages have a reputation for being expensive but are they really any more expensive than renting? Let’s crunch some numbers …
A £150,000 house or flat purchased with a 10% deposit leaves a £135,000 mortgage. This can be spread over 35 years, providing you’re 34 or younger at the start. Based on a full repayment mortgage with a fixed interest rate of 2.5% for the initial period, your mortgage payments could be under £500 per month. Now stop and think; what are you paying in rent and could you actually be paying less via a mortgage? If so, you owe it to yourself to be putting your money towards increasing your own asset rather than into your landlord’s pocket.
Being tied into a mortgage or being faced with exit charges if you leave is often a reason which puts people off mortgages. However, they can be arranged with just a two year tie-in period or even no tie-in at all. Mortgages can also be transferred to a different property if you ever want to move. Rental contracts often require you to sign up for a year so there isn’t much difference here we think. Another common misconception for first time buyers is that mortgage payments increase after an initial period – unlike renting. This absolutely doesn’t need to be the case; this is where a remortgage comes in to take advantage of another initial period, but that’s another blog for another day …
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