First time buyer deposits

First-time buyers could be forgiven for thinking that they might never get onto the property ladder, particularly if they do not have a deposit.

Gone are the days when you could waltz into a high street bank, hand over a couple of bank statements and be given a mortgage for more than the value of the property that you were hoping to buy.

The credit crunch is here – and its presence is being felt across the mortgage market. Banks and building societies are withdrawing mortgage products and applying stricter lending criteria by the day. In fact, it is no longer possible to buy a property without a deposit – unless your parents act as a guarantor.

Abbey was the last lender to offer a 100pc mortgage, but even it has now pulled out of the market.

So what does this mean for first-time buyers who are eager to own a place of their own?

Experts advise being patient and not rushing to buy a property amid fears about the economy and a fall in house prices.

While it is still possible to get a mortgage, you will need to save for a deposit – and the bigger the deposit you have the more likely you are to receive a preferential rate on your home loan.

There are still several 95pc deals available, but some mortgage advisers suggest that even these deals could soon be a thing of the past and that borrowers will be required to provide at least a 10pc deposit to buy a home.

There is a variety of savings accounts that you can choose from, including individual savings accounts or regular savings account.

Buyers might also want to consider Britannia Building Society’s HomeSaver account, which offers a rate of 7.25pc gross so long as you agree to take a Britannia mortgage when you decide to buy a property. If you withdraw the money without applying for a Britannia mortgage, there is a 90 day loss of interest penalty.

Another option for first-time buyers is to call on the Bank of Mum and Dad for help in raising a deposit.

Latest figures reveal that one in every two first-time buyers aged under 30 now receives some financial help from friends or family when buying a home.

However, if your parents are unable to offer financial assistance, perhaps they will let you move back home for a few months, which could be enough time to save up for a deposit.

Alternatively, you might want to consider sharing the burden of a deposit and buy a property with friends. However, it is essential to seek legal advice before signing up with this option you may end up paying a bigger price than you bargained for owning some bricks and mortar.

By Myra Butterworth

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