If you are a first-time buyer your finding out it is becoming increasingly difficult for people looking to get on the property ladder. Despite certain government schemes like Help to Buy and shared ownership there remains one big issue for all potential buyers. The biggest problem is getting a deposit of at least 10 percent. The days of one hundred percent loans, or even one hundred and twenty percent are long gone after the financial meltdown of 2008. A decade on, the country is still trying to recover and while the housing market has grown the average house price remains at £226,906. Lenders generally go up to ninety percent of the property’s value, if you pass the lending criteria, and even then the borrower will be subject to the highest levels of interest rates that there is. So, you’ll need a deposit, what you initially putdown and bring to the table, of £22,691 before anyone will talk to you. The good(ish) news is that with the Bank of England base rate of interest so low at 0.75% this translates to what interest rates banks charge on the money they lend you. Not wanting to scare you but at one point the interest rate in this country sat at 15%! As responsible lenders banks and building societies cannot rule out that happening again and they base some of their lending criteria on this. This is only the beginning, when the mortgage is paid off then there is the whole question of Equity Release Wiltshire or anywhere else in the country like you can find from https://chilvester.co.uk/equity-release/
What is the deal with interest rates? Well, when someone lends you money they are out of pocket. You’ll pay them back over time but they’ll need to charge you something for lending that money to you. This is usually based on a percentage of what you’ve borrowed. Put simply if I lend you a tenner and you say to me that you’ll pay me back at £1 pound a month over one year I need to make something on that for it to be worthwhile me lending it to you. As it’s a small amount I could say that you can pay me back a pound month plus 20% interest. This means that I charge you 20 percent of the ten pound. That works out to be £2. This is spread out over the year so every month you pay me £1.17. At the end of the year I’ve got my tenner back plus an additional £2.04 profit.
The same applies with your mortgage but on a large amount and for probably a lot longer than a year! Mortgage advisors will talk you through all of this and explain the amount to you will pay back and discuss what you can afford. It’s a long road but you’ll get there.