FIRST-TIMERS ON THE MOVE

ABOVE: Mortgages are easier to find and the base rate is low / pic posed by models

6th October 2009

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MANY first-time buyers are in a better position to get on the housing ladder than they have been for two years.

It is estimated that monthly repayments could be as much as £180 lower than they were in 2007.

This is because the average first-time home now costs £104,000 rather than £130,000 and the average home loan is £93,600 rather than £123,600.

But the good news does not stop there. There is currently no stamp duty to pay on properties worth less than £175,000.

Two years ago, first-timers had to find an average of £1,300 to cover stamp duty.

Add to that the news that HSBC is pumping an extra £500million into its 90% mortgage range and things could be looking up.

Andrew Hagger from comparison site Moneynet.co.uk said these factors “more than wipe out” the cost of the extra deposit needed, which has jumped from from 5% (£6,500) in 2007 to 10% (£10,400).

Mr Hagger added: “It’s important that people move away from the mindset where we view buying a property as a get-rich-quick scheme.

“We need to return to seeing it as a longer term investment and, first and foremost, as your home.

“If you can raise the additional deposit and accept that your deposit may be eroded in the short term, you can own your first property with a considerably smaller mortgage and monthly repayment than just two years ago.”

In 2007, a 95%, two-year fixed-rate mortgage with Britannia had an interest rate of 5.79%, with monthly repayments of £778 This adds up to £18,700 over the two years.

But today a two-year fix from HSBC at 5.99% with a £599 fee and requiring a 10% deposit would cost £602 a month. Over the two years, you would end up paying around £4,250 less.

Hannah-Mercedes Skenfield, at Moneysupermarket.com said: “HSBC’s commitment to further lending to first-time buyers is an indication of its belief in this part of the market.

“With the base rate still at 0.5% you might expect lenders to be offering better deals for first time buyers but they just don’t seem willing.”

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