February 2011
The plight of First Time Buyers in the property market for the
last 2 or 3 years has been well documented. From a situation where
there were in excess of 1000 different mortgage products to choose
from first time buyers found themselves suddenly forced into a
choice of around 20. Back in 2006/07 first time buyers could
readily borrow 95 or even in some cases in excess of 100% of the
purchase price but now are suddenly being asked to come up with
deposits of around 20% of the price to ensure that they can secure
a mortgage on reasonable terms.
It is fair to say that most potential first time buyers that are
able to purchase property valued at around the £100,000 mark are
unlikely to have savings of £20,000 or more and that unless they
had recourse to an alternative source of finance (e.g. the Bank of
Mum and Dad) they were effectively being squeezed out of the market
altogether.
Property experts have been pleading with the Government to force
Lenders to inject some much needed mortgage funding into the lower
end of the market without any noticeable effect and so it was
welcome news to hear about a £16 million package of investment
announced by the Scottish Government last week. A drop in the ocean
perhaps but the first small step towards helping out an area of the
property market that has suffered more than any.
Before any of you rush off to your Building Society to ask for
some of that £16 million to help you buy your starter home, it
should be explained that the money will not simply form part of a
slush fund into which lenders can dip when looking to provide
standard mortgages. Rather, the bulk of the money will be put into
a loan fund that will help unblock projects, accelerating
construction of up to 2,500 houses which will undoubtedly help a
beleaguered house-building industry.
The rest will provide some limited funding for shared equity
schemes directed particularly at low to mid income families in
rural areas and, once again, new house purchasers. It's a start -
the question is if it is too little too late!!
If you would like any advice or assistance in sourcing mortgage
funds then contact our own mortgage advisor Keith Barron at
Gillespie Macandrew on 0131-260-7520 or e-mail him at keith.barron@gillespiemacandrew.co.uk
.
