For many people buying their first house is a time fraught with worry and stress, the sheer number of choices and options available can confuse and confound even the most savvy potential home owners. But with the right help and guidance the dream of buying your first house needn’t be a nightmare.
I see a lot of dentists looking to buy property and not really knowing how to proceed. The obstacles seem endless. Indeed at any one time there may be more than 7,000 mortgages available, all with subtle yet consequential differences, and all potentially affected by national interest rates.
At the time of writing the Bank of England base rate remains at 0.5%, but the likelihood is that in the next six to nine months it will start to creep up. This will probably only be around a quarter of a per cent per increase.
Opinion is divided as to the precise outcome of an interest rate rise, even one as seemingly minor as 0.25%. While some believe that this will have little significant impact, some think it will cause mass crises and panic across the housing market. However, according to Mark Carney, Governor of the Bank of England, any increase that does happen will be ‘limited and gradual’ and will only go as far as to settle at 2.5% (half of the 5% pre-crisis rate). So maybe we shouldn’t start to panic just yet.
Generally we find that at the moment most of the mortgage deals available are very competitive. Therefore if you are thinking about securing your outgoings this could be an ideal time to consider a Fixed Rate Mortgage. As regardless of what happens to interest rates over the coming months, with a Fixed Rate Mortgage your repayments will remain the same for the length of your agreement.
Another positive for first time buyers is that you can now receive mortgage agreements with deposits as small as 5% and with a bit of creativity you can even get that 5% funded from elsewhere. In effect you can arrange 100% funding for a mortgage, meaning you don't need to find that initial five or ten per cent deposit, which can be the biggest stumbling block for first time buyers.
One final thing to consider here is the lenders themselves. Most will require associates, or any debtors, if they are self-employed to have three years accounts available before they will even consider offering a mortgage. A lot of dentists, when looking to purchase their first property are young associates, having just completed education and will therefore not have this length of accounts available.
Luckily, there are specific lenders who will now offer standard terms to dentists even if you haven’t got the three years’ accounts, and with the right IFA you can still arrange funding. An educated lender will be aware of how dentists get paid and will therefore know that lending to dentists without this arbitrary 3 years accounting information is still a viable option.
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