Money News

First-time buyers better off than two years ago

Reduced house prices and the stamp duty holiday mean first-time buyers are now in a better position to buy than they were two years ago.

First-time buyers can now buy their first property with a considerably smaller mortgage and lower monthly repayments than two years ago.

First-timers will need to build up a 10% deposit, but this will result in a smaller mortgage which, along with reduced house prices and the stamp duty holiday, will result in lower costs over the first two years, according to financial information company Moneynet.

Andrew Hagger of Moneynet, said: “Whilst a borrower would have to stump up a bigger deposit (10% instead of 5%), the combination of a lower purchase price, a reduction in repayments over the first two years and not having to pay stamp duty would more than wipe out the extra deposit requirement.”

He said that both lenders and borrowers should focus on the affordability of the mortgage and should see buying a home as a long-term investment rather than a “get rich quick scheme”.

HSBC said yesterday that it has already lent £1billion to home buyers with small deposits this year. It said it will now make a further £500million available to buyers with deposits of just 10%.