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The Government bail out of the big banks came with a number of strings attached. One of the most important conditions is a requirement for the banks to return quickly to lending for mortgages.
So are the good old days of great mortgage rates coming back, and will first-time buyers be able to get mortgages again and perhaps take advantage of what's definitely a buyers market?
Here are 10 of the most popular questions on the lips of would be first-time borrowers:
1. Do I need a deposit?
Absolutely yes some lenders may consider 100% advances but these tend to be restricted to young doctors, dentists, lawyers and similar.
Whatever your employment you will pay substantially more for a very high percentage loan than you would if you have a 20% deposit.
2. Who has the cheapest mortgages?
This depends on your individual requirements and will change regularly. The lowest interest rate may not be the best deal once you add in fees and charges. The easiest way is to compare using the true cost, the APR rate.
3. How much can I borrow?
Roughly, take away all regular payments and credit commitments from your income and then multiply by 4 for a single income or by 3 for a joint income. Depending on your credit record you might increase or reduce that multiple.
4. I pay £800 per month in rent and can afford a good-sized mortgage, why can't I borrow more?
You might be able to afford more now, but if interest rates go up you may not be able to afford the mortgage in future. And don't forget, homeowners may have to pay insurance, council tax and management fees.
5. Should I opt for an interest only or a repayment mortgage?
Remember interest only is cheaper each month, but does not repay your loan The answer depends on your own individual circumstances but in most cases professionals will recommend a repayment mortgage.
6. What is the longest period a mortgage can run for?
Most lenders stop at 35 years or your retirement age whichever comes first. Remember that the longer the mortgage term the more interest is payable.
7. What is MIG and will I have to pay it?
MIG stands for Mortgage Indemnity Guarantee Insurance. It is a one-off charge you have may to pay if you are borrowing more than 80% of the property's value. Not all lenders charge it and the level can vary so shop about if you are asked to pay it.
8. I want to buy a house with three friends. Can we all get a mortgage on one property?
Yes, but you need to think through the future possibilities carefully. In the past people assumed that they could just remortgae to buy out a flatmate who wanted to move on, but the drop in house prices proves that you cannot rely on selling a property quickly or at a profit.
9. I had some difficulties meeting credit card payments recently. Can I get a mortgage?
This will not prevent you from getting a mortgage unless you are bankrupt. It really depends on the level of debt and how long ago the problems occurred. Lenders may not offer you as much as they would lend to others on a similar income and the rate may be higher than normal.
10. I have a visa that lets me work and live in the UK although I do not yet have permanent residency. Can I get a mortgage?
There is no law stopping foreign citizens getting a mortgage in the UK however lenders may treat non-residents as a higher risk and this can make it harder to get a mortgage, depending on your individual circumstances
