Newspaper article The Journal (Newcastle, England)

Make Sure You Get the Right Deal; Owning Their Own Home Is Still the Dream of Many. DAVID WILSON Offers Some Tips for Those about to Apply for a Mortgage

Newspaper article The Journal (Newcastle, England)

Make Sure You Get the Right Deal; Owning Their Own Home Is Still the Dream of Many. DAVID WILSON Offers Some Tips for Those about to Apply for a Mortgage

Article excerpt

Byline: DAVID WILSON

OVER recent years there has been a rapid decline in homeownership levels, with figures suggesting current levels are similar to those of the late 1980s, according to the English Housing Survey.

Since the late 80s, homeownership has been on the increase with the introduction of the right-to-buy scheme and the changes in financial markets making access to mortgages easier. However, since 2006 the number of people who own and live in their own property has been seen to be on a gradual downward trend.

There are many well-publicised reasons for this, from rising house prices through to the financial crisis which prevented many people buying their first property or moving on to a new property.

The problems particularly faced by first-time buyers means now that only one in 10 homeowners is aged under 35.

This drop in homeownership is hopefully being approached positively by many mortgage lenders, with the introduction of mortgages requiring only a small deposit or limited equity in the property.

However, high loan-to-value (LTV) mortgages have attracted a lot of negative publicity over the years. So are these deals any good? Low loan-to-value mortgages - the percentage of the mortgage against the purchase price or property value - generally attract lower rates and better offerings from the mortgage lenders. This is due to the fact that, in principle, they offer a lesser risk than that of high LTV mortgages. The risk faced by both the borrower and lender increases as LTV gets higher, but what are the risks and how can we manage that risk? It is important to research the value of the property you're buying.

High loan to values are subject to both the deposit you have available and the value of your property. This means that ensuring you know the value of the property you're buying is crucial to understanding which mortgage deal you can access.

Doing a little bit of background research into the sale prices of property in the area, the historic purchase prices of similar properties and also ensuring the property your buying doesn't have any hidden problems will give you a good indication of the property value. …

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