Cash-strapped homebuyers lifeline with delayed | U.Okay.Finance News
Skipton Building Society has launched a new mortgage deal aimed toward giving first-time patrons a leg up onto the property ladder by permitting new owners to delay mortgage repayments for the initial three months. However, there’s a potential pitfall that may not be instantly obvious to many first-time patrons.Although no repayments are required during these first three months, this period is not utterly cost-free. Jonathan Bone, Head of Mortgages at Better.co.uk, warns: “While you might think, ‘Great! I don’t have to pay my mortgage and get myself and my home kitted out’, because you’re getting a few ‘free months’ off; the reality is that those ‘non-payments’ are likely to be added as interest to your mortgage. This means that when you do actually start making your mortgage payments after the end of the grace period, your repayments may end up being higher than you initially expected.”Or your mortgage time period could also be longer than you initially deliberate, which means you pay more over time. While these offers are a unbelievable and progressive solution to help aspiring owners, they don’t seem to be for everybody.”Essentially, it’s a postponement of payments rather than eliminating these costs entirely.The expert commended the “progressive” nature of the product, noting: “Delaying funds can help take the strain off that a lot of patrons really feel once they transfer and actually make a distinction in these first few months.”Nonetheless, he cautioned prospective buyers to consider several important factors before committing.He advised: “It’s important that you simply take into account whether or not it is possible for you to to comfortably make larger repayments after that vacation period; if not, then you would be stretching your funds skinny for years as you attempt to pay back the added expense.”He also warned of possible long-term repercussions of a delayed start mortgage: “While you should not be immediately penalised for choosing this product, lenders who carry out affordability checks sooner or later, corresponding to when you’re remortgaging, might view this selection as a signal of financial precarity.”Furthermore, choosing this type of mortgage might restrict your options for future deals, like when remortgaging, because it raises your loan-to-value ratio, which lenders often interpret as a higher risk.When applying for products such as a delayed start mortgage, your credit history might face closer examination. Moreover, an expert stresses the importance of budgeting carefully and accurately calculating affordability to ensure that you can meet monthly payments “even in troublesome durations”.
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