Alan Lakey is senior partner at Highclere Financial Services
“In assessing income I’m assuming that Brock repays the standard 9 per cent of all income above £15,000 – £990. This confirms his allowable income as £25,010.
He will incur purchase fees of about £1,500, which will leave £3,500 for deposit.
There are several possibilities, such as a 100 per cent loan or 97 per cent with either Halifax or Abbey. My preferred route would be Northern Rock’s Together scheme, which allows 100 per cent advance with no higher lending charge (HLC). Brock’s income allows an advance up to £120,000 – the scheme also offers £700 cashback. The two-year fixed rate of 5.89 per cent is attractive and does not tie Brock in for a lengthy period. The £895 application fee can be added to the loan which allows him the luxury of retaining £4,000 as an emergency fund – something every borrower should consider.
While other lenders may have slightly lower rates they are likely to limit his borrowing, charge a HLC or both.”
Brock may also be able to explore one of the start-up schemes which allows parental assistance, as offered by the likes of Bank of Ireland.
Mike Pendergast is an IFA at Zen Financial Services
“Brock is looking for a mortgage in excess of 95 per cent loan-to-value (LTV) which will increase the product interest rates available to him. He may be better off looking to save a 5 per cent deposit which will then increase his options.
Realistically with an income of £26,000 a mortgage of the size he is looking for should not be a problem and he should have a wide range of rates to choose from.
We would always recommend a fixed rate product to a first-time buyer to ensure that his payments stay the same in the early part of his mortgage – this will make budgeting easier for him as he will know exactly what his payments will be for a fixed period of time.
Discounted rates may give him a reduced initial payment but if interest rates rise he may not then be able to afford his mortgage payments, or may fall into difficulties.”
James Cotton is mortgage specialist at London & Country
“Despite his student debts, Brock should find that he is able to buy his first property. The low interest rate, plus the fact that payments are taken via his pay cheque, mean that his student loans will have a minimal impact on his disposable income.
He may have to look nearer the lower end of his budget, but he should be okay, particularly if he uses an affordability lender.
His savings equate to a deposit of just under 5 per cent, so he would need a deal that goes above 95 per cent. He could get his deposit up to 5 per cent, which would give him a wider choice, but it wouldn’t make much difference to the rate he could get.
If he’s happy borrowing above 95 per cent, he may prefer to hold back some of his savings to cover costs. Fortunately, based on his budget, Brock should avoid paying Stamp Duty.If he’s putting down 5 per cent, lenders such as Nationwide, Intelligent Finance and Cheltenham & Gloucester are worth considering. Northern Rock and RBS should consider him with a smaller deposit.
