If you've just graduated from a British university, you probably have higher than average earning potential - but you probably also have high debts. And you're a potential first time buyer in a pricey housing market. Lenders are looking to entice graduates onto the housing ladder with special mortgage deals for graduates: read on...
Do you have a degree from a recognised UK university? Are you a first-time buyer? Do you need help getting onto the property ladder?
If so, graduate mortgages have been designed for people like you.
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If you hold a full degree (for example, a BA or Bsc rather than an HND or HNC) from a recognised UK University, you may be eligible for a graduate mortgage. However, different lenders have different requirements based on age and the date of your graduation.
Most lenders require you to be under 35 years old. Some lenders may only offer you a graduate mortgage if you received your degree within the past 5 to 7 years, but other lenders don't have these limitations.
Lloyds Bank estimates that 22% of students end up living with their parents after graduation since they can’t afford their own place. If you have university debts, you may not have money to put towards a deposit.
Securing a mortgage these days is getting harder for first-time buyers. Many circumstances have made it more and more difficult to get on the property ladder:
These complications have caused a 44% decrease in the number of first-time buyers compared to 2002.
Lenders offer graduate mortgages because they expect your salary to increase once you start your career after graduation. Since you are likely to become a high earner, lenders feel more secure in offering you a higher loan-to-value which will cover a larger percentage of your property value and leave you with a smaller deposit.
Graduate mortgages can come with a higher loan-to-value percentage, lower rates in the first few years, and reduced fees (or in some cases, no fees). Lenders used to offer graduate mortgages of 100%+ loan to value, although since the 2007 credit crunch these have disappeared. Currently lenders offer up to 95% loan-to-value for a graduate mortgage, which is still more than other standard mortgages.
Lenders offer a variety of options for your graduate mortgage, including interest-only payments, a discount period (usually the first 2-3 years during which your rates will be lower), and tracker options. Since there are several ways to pay back a graduate mortgage, you should speak to a professional mortgage adviser who will talk to you about your finances, help you get a graduate mortgage, sort through thousands of deals, and find the right lender and the best offer for you.
Lenders feel confident that you will make more money as your career takes off after graduation. Therefore, they trust you to make your mortgage payments and they hope you will use their business in the future. By providing you with a mortgage, lenders hope to secure a client for life who will come back in the future to take out further mortgages, investments and savings accounts.
There are potential risks for both parties. Since lenders tend to grant more money for graduate mortgages, you need to make sure you can meet your repayments (especially in the early years where you might earn a smaller salary). If your career doesn't take off as you planned, you may be facing repayments you can't afford. In order to avoid this situation, speak to a mortgage adviser who can help you determine how much money you should borrow and how you can comfortably pay it back.
Just fill in this short form and a mortgage adviser will contact you to answer all of your questions, give you graduate mortgage advice, and get you on your way to buying your home.
Phone: 0844 375 5908 Best Mortgage Deals Limited Studio 237 179 Whiteladies Road Bristol BS8 2AG
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