At Just Mortgage Brokers, we have years of experience in helping would-be homeowners buy their first home. For university and college graduates, leaving full-time education represents a new chapter in their lives, the start of a new career and, for many, the opportunity to own their first property.
While there can be factors that hinder recently graduated applicants when shopping for a mortgage, there are lenders out there who offer mortgages specifically tailored to graduates. At Just Mortgage Brokers, we have access to deals from across the UK mortgage market, including broker-only mortgages not available from lenders directly.
What you need to know about graduate mortgages
Many graduates believe that it will be difficult for them to get a mortgage – and it’s certainly true that new graduates can face potential barriers in proving to a lender that they are mortgage-worthy. As well as accruing high levels of student debt while undertaking their studies, some may have an imperfect credit history or just a lack of experience and evidence to demonstrate their creditworthiness.
Then there’s that matter of the deposit. As of March 2018, the average UK house price was £227,871. Some mortgage lenders will lend a maximum of 95% of a property’s value, and in many cases the maximum is 90%. That means homebuyers currently have to put down an average minimum deposit of £11,393.
The good news is that some lenders understand the unique financial position that many graduates find themselves in, and offer mortgages tailored to people who have recently graduated.
In common with any other mortgage applicant, a lender’s main concern is assessing whether you have the capacity to afford the mortgage repayments on an ongoing basis. In practical terms, this means providing evidence that you have secured employment, and the lender undertaking an affordability assessment that looks at your income and outgoings to judge whether you can afford the mortgage.
Many graduates have the advantage of moving quickly into well-paid jobs, and this can potentially be to your advantage. It’s also the case that graduates with professional or vocational degrees – for example, a law degree or a graduate from medical school – may be seen as relatively low risk in comparison to some other types of mortgage applicant, and lenders may take this into account when considering your application.
Help to Buy
Help to Buy is an umbrella term for a range of government schemes intended to make it easier for people to get on the property ladder, and while they are not specifically designed for graduates, elements of the schemes are aimed at those with just a 5% deposit available. The schemes currently available under Help to Buy are as follows:
- The Help to Buy ISA (Individual Savings Account) is designed to help would-be homeowners save for a deposit. For every pound you save, the government adds a 25% bonus – up to a maximum bonus of £3,000 – to be used as a deposit on a first home.
- Shared ownership allows you to buy a share of a home (between 25% and 75%) rather than purchasing the property outright. You pay your mortgage on the share that you own, and rent on the remaining share. Shared ownership is available on both existing and newly built properties.
- The Equity Loan scheme is available to those with a 5% deposit available. Under the scheme, the 5% deposit is used alongside a government loan of up to 20% of the property value, allowing the homebuyer to take out a 75% mortgage. The equity loan is interest-free for the first five years, after which annual fees apply.
Just Mortgage Brokers can help
Whether you are graduating soon, have just graduated or have already embarked on your new career, we can help you find the graduate mortgage that suits your own unique circumstances – even if you have had credit problems. Call us today on 0808 223 0691 to discuss how we can help.