When you’re older, choosing the best flexible mortgages may be as simple as phoning your offset Melbourne mortgage broker and finding out what deals are around. That’s a great approach, particularly if you don’t need any complicated financial arrangements. The situation may be different for young people just out of university who are trying to find the best flexible mortgages.
For a start, they’re likely to be in debt. Most students leave university with a debt that’s upwards of £9,000 and some may be carrying debt of up to £20,000. That immediately reduces the amount they can borrow on cheap flexible mortgages and limits the available options.
The Income Gap
Meanwhile, the price of property is increasing, making it even more difficult for young people to afford the best flexible mortgages. Recent research has shown that the gap between income and property prices has widened in the last 35 years. Young Londoners now face an average property price of four times their annual income, while those in Scotland have property prices of 3.2 times annual income*.
All of this means that lenders have had to get creative with the best flexible mortgages. Several of the best flexible mortgage deals now take account of the fact that young people may be strapped for cash and may need help to afford their first home. The Cheltenham and Gloucester offset mortgage allows borrowers to link family and friends’ savings accounts to really maximise their offsetting, though they still have to be able to afford to take the mortgage in the first place. Yorkshire Building Society also offers a similar offset mortgage option. There are also a couple of lenders, such as Northern Rock and HSBC, which allow first time buyers to club together to buy a house, though flexible options on these mortgages may be more limited.
Flexible Mortgage Deals
So what else can young people expect when searching for the best flexible mortgages? We had a look for some of the top deals around at the moment. The best flexible mortgages for first time buyers wanting to borrow £100,000 are available at annual percentage rates (APRs) of around 5.74 per cent. The best flexible mortgages we found allowed overpayments and underpayments (subject to agreed limits). Four offered cash back of £150 to £250. There was no higher lending charge and redemption fees on the best flexible mortgages were relatively low. Other incentives included:
• free valuation from Scottish Widows
• Scottish Widows also do no arrangement fees and £150 cash back
• Vernon offer free valuation, no higher lending charge, £200 towards legal fees and 1% cash back
• free valuation fees from Coventry Building Society
Despite the income gap, young people have a lot to choose from when it comes to the best flexible mortgages. Interest rates are now more in line with those of standard mortgages, so they won’t always have to pay a premium for the flexibility that the best flexible mortgages bring.