The Government announced a new Mortgage Guarantee Scheme in this month’s Budget to help buyers with small deposits get on to the property ladder. The scheme, which will launch in April, means that buyers will be able to purchase a home worth up to £600,000 with a 5% deposit.
It is hoped that the scheme will in turn encourage lenders to reintroduce low-deposit mortgages. As new mortgage deals are introduced and others withdrawn each month, it is important to be prepared and to be able to act quickly when the time is right to obtain a mortgage.
- Work out your sums – work out what you have and what costs you will incur, as well as monthly mortgage repayments to get an idea of what you can afford.
- The bigger the deposit the better – the more you can save up to put down as a deposit, the bigger the choice of mortgages that will be available to you.
- What is your credit score? You can easily get a copy of your credit score which will allow you to see what lenders see when they review your application (to do so you can access this online via Experian, Equifax or TransUnion). Try to reduce your debts and if your credit score is not looking good, then consider closing down some credit cards and look at other ways of improving your rating.
- Proof of income – have your P60 to hand as well as 3 months’ pay slips and bank statements (or your last 3 years’ accounts if you are self-employed).
- If you are thinking of switching jobs, it can be wise to wait until you’ve got your mortgage in place.
The new policy will give people who can’t afford a big deposit the chance to buy their own home, and so far Lloyds, NatWest, Santander, Barclays, HSBC and Virgin Money are all prepared to offer mortgages through the scheme. No further information has been provided yet so if you are thinking of buying a property, speak to a mortgage broker now and get the ball rolling.