First-Time Buyers Do Have a Bright Future - Tim Betts, Taylor Wimpey

Mortgage Affordability? First-Time Buyers Do Have a Bright Future...

The lure of deposit-free mortgages has disappeared, and now a new plan by the Financial Services Authority (FSA) for a ‘mortgage affordability test’ looms as another likely obstacle in the way of frustrated first-time buyers.

But is the outlook really that gloomy for those trying to step onto the property ladder?

The answer is, quite simply, no. It’s just that the sensible, prudent help that’s out there isn’t grabbing headlines in quite the same way.

For example, several housebuilders, such as Taylor Wimpey, George Wimpey and Bryant Homes, are offering Government-backed HomeBuy schemes on new homes at their developments.

HomeBuy Direct is just one of these initiatives and helps people out by providing an interest-free equity loan to enable first-time buyers to purchase a new home for as little as 70% of the full price.

The result is that those qualifying for HomeBuy Direct don’t need a deposit to buy their home at all – the 30% loan, co-funded by the housebuilder and the Homes and Communities Agency, acts as the down payment on their chosen property.

What many people don’t realise is that HomeBuy Direct is available to those with a household income of up to £60,000, meaning a great many first-time buyers can choose to benefit from it, even if they are relatively high-earning.

Plus, the scheme is not tied to any particular properties at the new homes developments – that is, we don’t have an ‘affordable homes’ specification and a more lavish one for those who have the deposit in the bank. We offer HomeBuy Direct on apartments through to family-size houses – and there is nothing to distinguish whether the home has been purchased using the scheme or not.

So what about those who can’t take advantage of HomeBuy Direct?

Alternative Schemes

Well, there are a range of alternative schemes out there that work in a similar way. For example, Taylor Wimpey’s Deposit Match scheme doubles whatever the purchaser has as a down-payment, providing up to 10% of the value of the property as a 10-year, interest-free loan.

This aims to encourage purchasers to put down as big a deposit as they can, since the more they put down, the more Taylor Wimpey will contribute. In fact, we now see a lot of parents chipping in to the ‘deposit pot’ to ensure their children get the best deal when investing in a new home for the first time.

This makes a lot of sense in the long-term. Using Deposit Match, homebuyers can access a wider range of mortgages and secure lower rates, saving them money every month for years to come.

This type of practical assistance is just what first-time buyers need right now, to be able to qualify for a mortgage.

It’s true that we are seeing the return of higher loan-to-value ratios – notably, HSBC recently pledged £0.5bn funding to offer homebuyers 90% mortgages – but while this renewed confidence beds in among lenders, the incentives that new homes developers are offering right now represent the easiest and most secure way for first-time buyers to take advantage of current property prices.

My advice to first-time buyers is to stake their claim in the property market as early as they can.

According to the Halifax’s House Price Index, homes were still 7.4% lower in September 2009 than they were in September 2008 – despite having risen 1.7% since the start of the year.
This shows that compared with money in the bank, following a blip in 2007 and 2008, bricks and mortar is once again a very good investment – and combined with the more sober approach to borrowing and lending which the FSA favours, home ownership looks set for excellent long-term security.

Tim Betts, Taylor Wimpey

Tim Betts is Sales and Marketing Director for Taylor Wimpey West London, which has new homes developments in Berkshire, Buckinghamshire, Hampshire, Middlesex and Surrey. www.taylorwimpey.co.uk