Buying your first home can be a scary and intimidating thing. For most people, it’s completely unknown territory and with all the jargon and acronyms flying about, it can be somewhat overwhelming.
That being said, the benefits of getting onto the property ladder are substantial. Owning your own home and having the security and comfort that brings both in the present and the future are exciting propositions.
The process from deciding to buy your own home to getting those keys in your hand is an important one. It is important because you are embarking on a financial journey and need to be equipped and prepared.
The best way to ensure you are exactly that is by having a mortgage agreement in place that fits your situation and means.
The good news coming out of the mortgage industry this week is that more mortgage options are being made available to first time buyers, and that first time buyers have a better chance than earlier in the year of securing the mortgage they want.
What is this good news?
Research from Mortgage Broker Tools has found that first time buyers are finding it much easier now than they were earlier in the year to secure a mortgage.
This is indicated by a significant drop in what is called the ‘affordability gap’. The affordability gap is a reflection of how frequently lenders are able to secure the kinds of mortgage loans their customers are seeking.
According to the research, in April 2020 the affordability gap was 24%. This means in almost a quarter of instances for first time buyers, brokers were unable to get a deal with any lender for the amount their client was seeking.
Fast forward to October 2020 however and that figure is down to a comparatively paltry 11%.
What does this mean for me?
First time buyer mortgages are known for not being the easiest things in the world to secure. Lenders know this is new territory for the applicant, and have to make doubly sure that they are in a position to manage and keep up with mortgage payments over an extended period of time.
Add these two factors together, and securing that first time buyer mortgage as a self-employed worker has proven to be something of a headache for many people over the years.
What the research indicates however is that mortgage brokers are having far greater success in securing mortgages for first time buyers than they were earlier in the year. The research seems to indicate a greater willingness on the part of lenders to engage with first time buyers and take the leap to provide them with the mortgage they want.
Reticence to do this earlier in the year may have stemmed from market uncertainty, while the current willingness is likely an attempt to get their own business moving again following the sustained period of difficulty seen in the middle part of 2020.
This has obviously been a mad year for the mortgage industry, but what this research shows is that now is a far better time to seek that first time buyer mortgage you may have been eyeing up than earlier in 2020 would have been.
Should I seek a first time mortgage now?
As a first time buyer, this kind of research should fill you with optimism. It shows market conditions are favourable, and that the kind of mortgage you want may not be out of your reach.
Be sure to work with a tried and trusted mortgage broker, particularly if you are self-employed and working as a contractor or freelancer, as lenders often require extra reassurance that you are able to fulfil your end of the mortgage bargain.
Hopefully this news will come as something positive in what has been a tough year for everybody. And you never know, you could be moving into your dream first home in the early part of 2021!