The closure of the government backed First Home Fund on Thursday , less than a week after being re-launched, came as a huge blow to a number of people across Scotland, who were looking to take their first steps on the housing ladder.
Many people, who in the past might have been restricted to the Lift scheme, had been attracted by the concept of having outright ownership of their property, whilst only having to repay the government input on a pro rata basis, out of any future profit on sale.
For those who did not manage to get their applications in, many are now looking to the lenders who will accept a 5% deposit. The options in this space have been increasing steadily since the turn of the year ; however applicants should be aware that these lenders will be applying fairly rigorous credit assessment ; and clearly the interest rates for 95% Loan to Value products will be higher than their 90% alternatives.
Faced with rising property prices, first time buyers in the Highlands and Islands have regularly sought out support from family, either by way of a guarantor, or gifted deposit.
In the absence now of a potential £25,000 from the First Home Fund, this is likely to increase.
Applicants should be aware that lenders have different rules for how a gifted deposit is documented – and that the solicitor arranging the purchase will also require paperwork from the donors of the gift. Especially where the timescales for getting an offer in for a house are short, a delay due the lender requiring additional information relating to a gifted deposit, can make all the difference between success and failure.
A key point for First Time Buyers can often be the maximum mortgage sum available. Over and above which lender has the lowest rates, there can be significant differences between lenders criteria; especially for self employed applicants, or those who have additional income over and above their basic salary , whether it is overtime, bonuses or allowances.
To find out more or to speak to Munro and Noble Financial Services, telephone 01463 71 88 72 or email Hamish Malcolm at Hamishm@munronoble.com