First-time buyers should head for oldham
Filed under: Mortgages, Property
A recent report suggested first-time buyers should head to Oldham if they are looking to get on the property ladder. The report found that home buyers with a 25 per cent deposit could expect to pay the lowest monthly mortgage bill in any English city coming in at just £353 a month. Housing hunt
To buy a property with a 25 per cent deposit in Oldham requires savings of £22,754 compared against £32,362 and £25,917 in other areas such as Leeds and Liverpool. The average 25 per cent deposit is now equal to £29,901 but this figure varies considerably from town to town. A 25 per cent deposit on the average London property for example is equal to £79,892.
The magic number
Twenty five per cent is regarded as a bit of magic number in the mortgage world. In the current mortgage market it is generally regarded as the loan to value ratio at which mortgage deals start to become more competitive and allow borrowers access to cheaper monthly mortgage payments.Realistic rates
Based on best-buy mortgage rates, those with a 25 per cent deposit borrowers can expect rates of 3.81%, a low rate of interest by historic standards. This rises to five per cent however for those borrowers with a 20 per cent deposit. This does not sound like a big difference but when you are talking about a loan of a hundred thousand pounds of more, this all adds up.Counting the cost
With average property prices in Newcastle for example currently averaging £122,899 those buying with a 25 per cent mortgage deposit can expect to pay a monthly bill of £477 but this would jump by almost £100 a month for those with a 20 per cent deposit.Bigger loan deals
However, the market for mortgages for those with smaller deposits is improving. This time last year there were very few deals available to borrowers and rates were high. Today however there are almost 150 products on the market.Tallying the cost
While deals may be available to those with small deposits, you can expect to pay more interest and face bigger monthly bills. Based on average house prices you can expect to pay £614 a month on a 90 per cent mortgage.Bagging a deal
For those with some kind of a deposit stashed in the bank, there are plenty of deals to choose from. For those looking to buy with a 25 per cent deposit, the Post Office has just launched a new range of products with two year fixed rates as low as 3.89 per cent. For those with a 10 per cent deposit, Nationwide offers a two year tracker with an initial rate of 4.63 per cent.
Building a deposit
The advice to would-be buyers is that bigger is best. The bigger your deposit the less you will have to pay on your mortgage. This isn't necessarily bad news. Many property analysts are predicting house prices will remain flat or even fall in the coming months and so buyers are unlikely to be missing out on property price rises. Taking time to save will pay off in the long run.Find the cheapest mortgages
