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First-time buyers have it tough at the moment. Not only are suitable mortgage rates edging up, leading to a considerable gap between low and high loan-to-value deals, but raising that all-important deposit is still a significant challenge – so much so that many first-time buyers (FTBs) have missed out on their dream home because of it.
That's according to research from the Nottingham Building Society, which found that, in the last year, 35% of would-be first-time buyers have seen house deals fall through because their deposit was too small to secure a mortgage.
This is despite the fact that around half had more than 10% of the purchase price saved before looking to buy; 18% had a deposit of less than that, while 17% had less than 20% saved up and ready to go, but considering first-time buyer mortgage deals are typically available to those with a deposit of just 5% of the house price, it's disappointing to see that so many missed out.
"Borrowers with small deposits have a wide choice of loans to pick from, but clearly many are struggling to buy the houses they want with so many potential deals falling through," said Ian Gibbons at Nottingham Mortgage Services. "It is particularly worrying that borrowers with a 10% deposit or more are struggling. They should be able to secure a mortgage and not have to miss out on house purchases simply because their deposit is too small."
Being able to raise a big enough deposit is of course essential if you want to buy your first home, but so is finding the right mortgage deal to accommodate. While many would-be buyers appear to have had difficulty finding suitable options, the fact remains that there are plenty of first-time mortgage deals available – all it could take is a bit of research, and checking out the Best Buys would be a great place to start.
However, that could be only part of the battle. Being a first-time buyer means you should aim to seek professional finance advice before you make your decision (our mortgage advice service could help), and have you given thought to your credit score? You'll need to check that your credit rating is good enough for a mortgage before you even think about applying, because if it isn't, you'll fall at the first hurdle.
You'll need to keep a close eye on the property market, too. Thanks to rising house prices, a 5% deposit that may have been sufficient a year ago could now be wide off the mark, so make sure to keep watching typical prices of the kind of property you want in the area you want to buy in, so you're completely prepared and know what you ultimately need to aim for.
Of course, you'll need to find the right savings account to build up your deposit. You may want to consider a Lifetime ISA or a Help to Buy ISA for extra Government support and a 25% top-up on your savings, which could go a long way to helping you realise your ambitions. With a bit of preparation, a diligent savings habit and extra advice when you need it, you'll hopefully find that your homeownership dreams are closer than you think.
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