First time buyer advice

Lulabel1995

Hi, this is my first ever post on money saving expert and I have only just joined the forum! I am looking for some advice for a first time buyer.

I am saving for a mortgage with my boyfriend, between us we have a help to buy ISA and a regular ISA (as we save more than £200 per month)

Could anyone please explain the difference between the help to buy ISA and the mortgage gurantee scheme? Or are they the same thing? At the moment I am slightly worried about saving for a deposit, and not being accepted for a mortgage. My credit score is good, where as my boyfriends isn't great, although he is working on increasing it currently. Howerever my annual income isn't high enough to put the mortgage in just my own name, and although his annual income is relatively high, he doesn't have a great credit score :mad:

Any advice or help would be really appreciated!!

csgohan4

Lulabel1995 wrote: »

Hi, this is my first ever post on money saving expert and I have only just joined the forum! I am looking for some advice for a first time buyer.

I am saving for a mortgage with my boyfriend, between us we have a help to buy ISA and a regular ISA (as we save more than £200 per month)

Could anyone please explain the difference between the help to buy ISA and the mortgage gurantee scheme? Or are they the same thing? At the moment I am slightly worried about saving for a deposit, and not being accepted for a mortgage. My credit score is good, where as my boyfriends isn't great, although he is working on increasing it currently. Howerever my annual income isn't high enough to put the mortgage in just my own name, and although his annual income is relatively high, he doesn't have a great credit score :mad:

Any advice or help would be really appreciated!!

https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/
for the help to buy ISA


https://www.helptobuy.gov.uk/mortgage-guarantee/how-does-it-work/ for the mortgage scheme


You would have to look at the credit history as the score means nothing, your credit agency doesn't lend money to you do they? Lenders have their own referencing and scoring criteria.


So things such as CCJ's, defaults and bankruptcy is important.


http://www.moneysavingexpert.com/mortgages/?_ga=1.50936367.727839268.1480014497


Is a good start for first time buyers unsure of the process

LeagueOfWolf

Don't worry about about rejected. Try your hardest now like you say you are to save and your boyfriend to boost his credit rating (making payments on time etc) and worry about not being able to get a mortgage when it comes to that point. When the time comes get a mortgage advisor who can advise you based on your current situation. There are mortgage lenders out there who are willing to lend to those with not so perfect credit ratings for higher interest rates so it's not completely impossible.

Help to buy ISA is an ISA savings account that only lets you save max £200 a month (£1200 in the first month). When you go to purchase your first flat you will close your ISA account take that receipt to your solicitor who will apply for a 25% government grant on the total savings. That's extra money FOR FREE! So if you manage to save about £10,000 over the years you will get £2500 free money And that will only go towards your completion money not the fees associated with house buying nor the initial 10% deposit. You can save a maximum of £12000 to get the maximum free money of £3000 which brings the deposit to a whopping £15000. Only downside is it will take quite a few years to save a big deposit as you can only save £200 a month.

The mortgage guarantee scheme allows you to put down a 5% deposit. If you have a decent credit rating you are able to get a 95% mortgage from the bank. This mortgage is still based on your current salary x4.5 (or whatever it is) and you can't get more than that. Also this scheme is ending at the end of this year and I'm not sure if there are plans to renew it.

There is also a Help to Buy Equity loan which is quite similar to the mortgage guarantee scheme. You can buy a house again with minimum 5% deposit. The government are able to lend you 20% (outside of london) or 40% (london) costs of the flat and the rest you can get a mortgage on providing the mortgage is around x4.5 your salary again. This government loan is interest free for 5 years. This does mean you are able to purchase a higher priced property than how much you usually would be able to afford with a smaller deposit. This means if you earn £20,000 and your house is £100,000 you can put a £5,000 (5%) deposit with £20,000 (20%) government loan and a £75,000 (75%) mortgage. Without the government loan you would only be able to afford a property that is £90,000 but you would need a bigger deposit of £9,000 (10%).
The only issue with this scheme is you are only allowed to buy 'new builds' which are pricy depending on where you are.

Sorry if that was confusing..I hope that helped in some way. Good luck saving!!

Lulabel1995

Thank you leagueofwolf that was really helpful ::cool: hopefully they do bring out something else after the mortgage gaurantee!

armchaireconomist

Hi, I bought a property in April using the mortgage guarantee as I only put down a 6% deposit, all that was required was I sign a form to say I was a first time buyer etc. - in essence the government guarantees a set % in the event you decide not to pay your mortgage, so when it inevitably goes to auction they guarantee to cover the shortfall to the lender. In turn, gives lenders more encouragement to offer products to people like you and me who are able to make payments but have only a small deposit.