A number of experts are calling for the government to offer a guarantee for 100% mortgages.
Some believe that this would be a more effective solution to help first-time buyers onto the property ladder than the stamp duty reform. One of the main barriers to people buying their own property is saving for a deposit, which becomes more difficult as property prices increase. A 100% Loan To Value mortgage would remove this barrier, as long as they could afford the repayments.
Private client assistant for Blick Rothenberg, Jonathan Barratt, favours the return of 100% mortgages, and suggested that the government should act as guarantor for first-time buyers who could afford the repayments. He added that first-time buyers would find it easier to move from a rented property to owning their own home, as they would only have to pay for Stamp Duty, if applicable, and legal fees. He stated that the cost of a mortgage may even be less than monthly rental payments.
Broker Ray Boulger also favours the return of higher Loan to Value mortgages, saying that this would address the problem of first-time buyers having to rely on the ‘bank of mum and dad’. If their parents do not own their own property, this may not be possible. He added that some buyers can afford the mortgage, but are struggling to save for a deposit.
Mortgage advisors spend time studying on CeMAP courses so that they can offer support to first-time buyers who may be struggling to find the most suitable option for buying a home.