First Time Home Buyers – the Lifeblood of the Property Market

First time buyers are seen as the lifeblood of the property market and when financial institutions make it nearly impossible for them to purchase their first home this affects the economy, as well as the property industry itself. Many young people are being forced to rent property and the monthly payments on their rented property are, at times, higher than the repayments that they would have had to make on their mortgage. This is affecting their own financial futures and it is making it even more difficult for them to save up for a deposit on their first home.

Financial institutions around the country are starting to realise that they need to make purchasing a property a viable option for younger individuals who are interested in buying their first home without being too lax concerning their application process or financial requirements.

Rising Interest Rates and the Falling Property Market

Individuals who are given the opportunity to purchase property will need to ensure that they can afford the monthly repayments or they might find themselves in a very tricky financial situation. When individuals fail to pay their monthly instalments, it affects both the financial institution that provided them with the loan and it affects their own financial record and future. For this reason, financial institutions need to be responsible when it comes to approving loans without alienating first time buyers altogether.

100% Mortgage Loans – no Deposit Required

Major financial institutions around Britain are finally offering 100% mortgage loans to first time buyers but these buyers will still need to undergo strict evaluations in order to qualify for the loan. A spotless credit history and a good salary are prerequisites for this type of loan, as they ensure the individual’s ability to pay back the loan and avoid unnecessary financial strain.

When applying for a home loan, first time buyers need to be cautious when choosing their loan amount as financial institutions might approve a loan of up to £450,000 and this could severely affect the amount of the repayments and the overall ability to repay the loan on time. This is one of the only negative consequences of the more easily available first time home loans that are being made available to first time buyers.

Property Prices on the Rise in the South

Research into the ages of property owners in the north and south of Britain has provided financial institutions with valuable insight concerning the property market and the future of this industry. Studies have shown that first time home buyers are approximately 4 years younger in the north and this has led to a widespread debate over the different facets involved in purchasing a home, from the price of the properties in general to the services provided by financial institutions in the country. This debate has led to some understanding over the difference in age between areas such as London and Cleveland where the difference in age between first time home buyers is as much as ten years.

Buyer Discrepancies between North and South

The research that has been conducted between first time home buyers in the north and south of Britain have indicated that one of the biggest influencing factors in the vast age difference is the fact that property prices are higher in the south. Since first time home buyers have traditionally been required to save up a large deposit to place on the home of their choice they often have to save up for a longer period of time. Financial institutions have been very reluctant to provide individuals with a loan if they do not have this deposit and this can account, in part, for the discrepancy in age between first time buyers in the north and those in the south.

The 100% Mortgage Loan Debate

An interesting point to note is the fact that, although first time buyers in the north seem to be more able to purchase homes at an earlier age, they are statistically at a higher risk for financial strain and there is a higher rate of delayed repayments. Financial institutions need to be cautious when they approve loans to ensure that they do not allow their clients to find themselves in unnecessary financial difficult due to the fact that they have received too much credit.

The Rise of the 100% Mortgage Loan

As large financial institutions begin to make 100% mortgage loans more available to first time buyers, other financial institutions will follow and this might just even out the age differences between the north and south. The effects of these types of loans will, hopefully, lead to a rise in the property market but buyers need to ensure that they are aware of the financial pressures of purchasing a home so that they can structure their financial responsibilities appropriately to make payments on their mortgage each month without fail.