Alternatives to 95% Mortgages for First-Time Buyers
We always ensure our clients have the right knowledge of the different first-time buyer mortgage products and types, including some of the alternative first-time buyer help schemes that may be applicable.
For example, you could be eligible for the following:
- Right to Buy, which helps first-time buyers in council homes buy their properties with a first-time buyer mortgage at a heavily discounted value.
- Right to Acquire, a first-time buyer help scheme for tenants of housing associations in much the same way.
- The First Homes scheme assists first-time buyers on a low income, including key workers, with generous discounts.
Please get in touch if you’d like more information about the varied programmes for first-time buyers that might help you get onto the property ladder.
Other First-Time Buyer Help Initiatives
First-time buyers often assume they need to apply to a specific scheme to be able to access 5% mortgages for first-time buyers, but provided you meet the lender's criteria, you can apply for any mortgage you may wish.
The challenge is that many first-time buyers do not have a large deposit and therefore are prevented from applying for the most affordable mortgages, which is where 95% mortgages for first-time buyers prove useful.
Some of the first-time buyer help schemes may be more relevant than others, including:
- The first-time buyer mortgage guarantee scheme, where the government guarantees the mortgage to offset the lender’s risk and make it more likely that participating lenders will offer 5% mortgages for first-time buyers with a five-year fixed-rate term.
- Shared Ownership is another potentially helpful scheme, where those with a low deposit can purchase a share of a property from a housing association, paying a nominal rent on the proportion owned by the organisation.
Other first-time buyer mortgage products can be made available with support from family members, either by helping with your deposit or acting as a guarantor to improve your eligibility for a competitive interest rate and low-interest product.
Guarantor mortgages mean somebody, normally a parent, guarantees your first-time buyer mortgage, acting as a safeguard where you have a small deposit and wouldn’t otherwise qualify for a first-time buyer mortgage.
A similar product called a family offset mortgage means a relative deposits funds into a secure account to act as a guarantee for the lender offering the product for first-time buyers.
Finally, you could consider a joint buyer, sole proprietor mortgage - a further option where you purchase a property as first-time buyers in conjunction with a relative, retaining 100% ownership of the home, but with them as a named person on the mortgage deeds, making it easier to qualify for a first-time buyer mortgage.
Choosing the Right 5% Mortgages for First-Time Buyers
There are multiple lenders and products, each with pros and cons, so it is important not to move ahead with the initial mortgage you come across. You can also verify whether 95% mortgages for first-time buyers you think you will qualify for are competitive compared to other options.
Lenders offering 95% mortgages for first-time buyers still have discretion whether they offer to lend, so first-time buyers with adverse credit, for example, may need professional first-time buyer help to find a suitable provider – they will normally find that mainstream banks will automatically refuse their applications due to bad credit history or a low credit score.
Mainstream banks such as Santander, Barclays and HSBC currently have 5% mortgages for first-time buyers, but you will still need to pass their affordability assessments and credit checks to proceed.
It is also not always the case that 95% mortgages for first-time buyers backed by the first-time buyer mortgage guarantee scheme have competitive interest rates. Niche lenders and providers may offer far better rates for first-time buyers, with or without products enrolled in the government initiative.
Some of the best lenders for first-time buyers do not advertise to the public and only accept applications from their approved network of lenders, so it is highly advisable you consult a whole-of-market broker specialising in first-time buyer help to make informed decisions.
Professional Support for First-Time Buyers
Revolution Finance Brokers has years of experience working with first-time buyers with varying circumstances, analysing their requirements, matching their borrowing needs with lenders and handling the application process end to end.
If you need first-time buyer help and are not 100% confident which interest rates for first-time buyers are the most affordable or whether 95% mortgages for first-time buyers are the right fit, please get in touch at your convenience.
