A leading expert has claimed that many first time buyers will simple be frozen out the housing market whist tighter lending criteria coupled with lower loan to values leave potential buyers a mountain to climb in obtaining enough deposit to buy their first home. Unless lenders start to offer mortgages with loan-to-values higher than 90 per cent, first-time buyers will be slow to return to the market which will cause more stagnation in the housing market and may drive prices down.
The editor of What Mortgage Magazine Ben Wilkie said first time buyers now need to find a substantial deposit, which is a huge amount of cash, especially as many people still have student loans or other unsecured debt.
The issue is reducing the amount of deposit that first-time buyers need.
Some lenders are offering 90% loan to value however the additional costs and charges associated with buyer a home means many people need to raise at least £20,000 in order to secure a home loan, Mr Wilkie explained.
With mortgage lending criteria likely to tighten further it's unlikely we will see a swift return of 100% loan to value lending in the market place
This is clearly of concern to those people who may need to sell their home quickly, perhaps due to the threat of repossession, divorce / seperation, redundancy or other unforeseen circumstances. The lack of first time buyers means that sellers will need to rely on an ever diminishing pool of buyers, especially if they need a fast sale. The best advice we can give people, said one establishing property professional, is to set a realistic price for your home, make sure all repairs are done, tidy any clutter and be prepared to consider all options and possible solutions if, as predicted, the market gets tighter as the winter months draw in.
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