Mortgage UK: First time buyers are increasingly choosing this type of deal

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    Mortgage payments are usually negotiated over a number of decades when a person decides to buy a home. Other than the deposit buyers are required to pay up front, the cost of the house is spread out over a number of years. Buyers are then required to make regular payments, until the loan is met, and they become homeowners.

    This was compared to the 33 percent who chose this option a decade previously. 

    The MHCLG stated this could be a result of monthly costs adjusting over time for many prospective homeowners.

    The survey also revealed that in 2018/19, 11 percent of renters considered applying for a mortgage.

    However, of those, only 26 percent managed to make an application. 

    Mortgage applications have become increasingly difficult in recent times, and have been somewhat affected by the COVID-19 crisis.

    Several lenders have been forced to pull their 90 to 95 percent alone to value mortgage products off the market in response to trying financial circumstances.

    As a result, many properties have required buyers to put together a higher deposit amount to secure the home of their choice. 

    While the minimum amount usually required for a house deposit is five percent of the home’s value, these deals are currently few and far between.

    Those who already have a mortgage, however, have been granted a form of financial support from the government and the Financial Conduct Authority (FCA).

    Mortgage payment holidays have allowed people to take a break from their regular payments due to the financial impact of lockdown, and have thus extended the time people have to pay the sum back. 

    First announced in March, homeowners were delighted to find the government extended this payment freeze option for another three months, to help those struggling.

    This allows people to defer their regular payments for a short period of time, however, without affecting their credit rating.

    However, people have been encouraged to think about this option carefully, as once again, interest is likely to rack up in the meantime.

    Stephen Jones, chief executive of UK Finance, said: “A payment holiday may not be the right choice for everyone, and borrowers should only apply if they need one.

    “We would encourage any borrowers concerned about their financial situation to check with their lender.”



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