As a first time buyer, it may seem like the whole property market is against you at times. Especially because of recent economic events and the frenzy the lenders seem to have gone through over the last few days. But thankfully the banks seem to have calmed down a bit and are slowly returning to lending, albeit with no doubt higher rates and fewer products as the Bank of England still battles inflation. Unfortunately for a lot of people, mortgage affordability is still a struggle and although the average salary has increased, so have lender’s affordability stress tests meaning it’s becoming harder and harder for people to borrow higher loans for more expensive properties. That is where initiatives like Nationwide’s helping hand mortgage and other products can be a life saver!
What Is The Nationwide Helping Hand Mortgage?
The two main issues that first time buyers have are mortgage affordability and saving deposits. As well as changing their mortgage affordability thresholds, lenders are increasingly asking for me deposit from purchasers. There are now very few lenders who offer 5 or 10% deposit mortgages and the tightening of borrowing power for new buyers is meaning that people are needing to put down more deposit than ever before to bridge the gap.
Noticing these struggles and admirably taking the initiative to help out struggling first time buyers, Nationwide Building Society have launched the helping hand mortgage. This scheme offered by Nationwide is designed specifically for first time buyers and aims to help them enter the property ownership market on special terms and conditions that wouldn’t be available on a standard mortgage.
How Does A Nationwide Helping Hand Mortgage Work?
Nationwide’s helping hand is available to eligible first time buyers on 5 and 10 year fixed rate products. They are potentially available up to 95% loan to value, meaning that you could potentially out down as little as 5% deposit yourself and borrow a 95% mortgage. To qualify for a helping hand mortgage, you MUST be a first time buyer. However, in Nationwide’s eyes, if you have not had a mortgage within the last three years this classifies you as a first time buyer. If you are applying for a helping hand mortgage with another person, you both must be classed as first time buyers in Nationwide’s eyes.
With a helping hand mortgage, you may potentially be able to borrow more than you can on a standard mortgage. General guidelines for mortgage affordability is around 4.5X income. Meaning that if you earn £40,000 a year, generally you may be able to borrow £180,000. However, with the Nationwide product, you may be able to borrow up to 6X you income. So, if you earn £40,000 a year your affordability could go up to £240,000. Other standard affordability rules such as rules regarding credit commitments will still apply and could affect your borrowing potential.
Who Can’t use It and Are There Any Other Benefits?
On Nationwide’s website, they specify that you will not be eligible for the scheme if you or the person you are purchasing with are self-employed or using the scheme in conjunction with any other affordable home ownership scheme such as Help to Buy, shared ownership, Right to Buy or Forces Help to Buy. Some of the perks and benefits offered by the helping hand product are:
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£500 cashback* when you complete your mortgage.
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Ability to overpay up to 10% of the loan amount each year without incurring an Early Repayment Charge (ERC).
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After your fixed 5 or 10 years product ends, you’ll move onto Nationwide’s Standard Variable Rate, which is currently 5.24%. You will subsequently be offered a new product with the same lender if you wish to take it up.
Speak To A First Time Buyer Mortgage Advisor Today
At Oportfolio Mortgages, we are expert first time buyer mortgage brokers and advisors. That means that we know all the ins and outs of first time mortgages, and we have access to all products available. Senior mortgage advisor at Oportfolio Jade Pinkerton has this to say about helping hand mortgages and first time buyers:
“We often use the helping hand mortgage for first-time buyers, to get the higher loan size. It allows us to be able to get more than other lenders and brokers, but it is important to know the small print and the terms and conditions that come with it. It is restricted to certain products, rates and types of mortgage, and you have to qualify for it. It isn’t guaranteed. It is also wise to talk things through fully whenever pushing for maximum affordability. You need to make sure you are financially protected against the debt should the worst happen, and we advise on this for all of our clients.”
There are plenty of products on the market designed to help first time buyers or people struggling with mortgage affordability, and now that lenders are returning to the market, investing in property is still a wise and profitable choice for new buyers. Give our advisors a call today to discuss any questions you have about buying. We are here to help!
