Recent figures in the UK reveal that though the mortgage loan rates in the UK are at their all-time record low levels, approvals are at its all time low level. A brand new report from the Halifax says that the payments on the mortgage loans presently account for at least a quarter of the take-home pay due to the outrageously low interest rates and the extremely weak home prices. Halifax is also of the opinion that the low interest rates will also keep the house prices stable throughout the rest of the 2012. Despite all the positive reports on the mortgage loans, the British Bankers’ Association sees the number of mortgage approvals at their record low level.
When the credit crunch or the economic recession hit the UK is the year 2007, the mortgage monthly installments accounted for about half of the household income of the nation. It is since then that the mortgage loans have become affordable in every region of the UK, especially in Ireland, where it has fallen up to 2/3rds while being halved in Scotland, Yorkshire and Wales.
Small deposits being abandoned by the UK lenders
All those desperate home buyers who are pretty worried about getting their first home mortgage loan are being straight away denied by the UK mortgage lenders due to the small deposits. Usually all mortgage lender require the borrowers to make a down payment of 20% of the loan amount and reports reveal that the number of mortgage loans that were actually lent out to people with less than 10% deposit plunged in the last year, 2011 and loans for the buyers with 5% deposit dropped by a third in the last 6 months. This particular mortgage famine among the first time home buyers is just a contradiction of the mortgage loans that are offered to the more risky borrowers who can put down a larger amount.
Some tips to keep in mind in order to seal the deal on the best mortgage loan
When you’re a first time home buyer in the UK, you will probably come across a number of situations and circumstances when you may feel that a little more information would certainly enlighten you on the entire process of mortgage lending. Here are some tips that you should keep in mind when you want to take out a mortgage in the UK and also save your dollars.
Boost your credit score: You should have a stellar credit rating so that the lender feels that you’ve been managing your finances well in the past. A good credit score will mean a better personal finance management and timely payment of your debt obligations. Boost your credit score before taking the plunge.
Save your dollars to pay down the right amount: As you see that the UK lenders are not entertaining all those lenders who are paying down an amount that is not up to their expectations, you should always save the required amount of money in order to grab the best loan.
Repay your debts: Repaying your debts will lower the DTI ratio or the debt-to-income ratio and the lenders will feel that you can manage the monthly mortgage payments after paying back the other debts.
Therefore, when you’re wondering about the hassles of being a first time homebuyer in the UK, you need not fret as a few responsible steps can easily guide you through the right path. Take a look at the bigger picture before you approach a lender.