Longer term mortgages a must for most Cheshire first-time buyers

New data published by consumer champion, Which Money, for Cheshire West and Chester shows the average spend for first-time buyers is a whopping £217,830.

Those looking to put down a standard 10 per cent cash deposit will need to save £21,783 before they even get started.

At an annual interest rate of 5.34 per cent – decent, by today’s standards – such a buyer would face repayments of £1,184 every month, if they borrow over 25 years.

If they are wise and stick to the ‘28 per cent of your gross salary’ rule of thumb, a household needs to be pulling in £50,000 before saying goodbye to renting.

While this is in reach of working couples, with the average salary for the borough at a little more than £30,000, a traditional 25-year mortgage is well beyond the means of most single folk, whatever their age. 

Nic Williams (right) runs Mortgage Solution Ltd on High Street, Northwich, with his wife, Victoria Williams (Image: Nic Williams)

Nic Williams is a mortgage broker based on High Street in Northwich, whose company, Mortgage Solutions Ltd, specialises in helping first-time buyers secure their first home. 

He says the Which purchase price is on the high side for Northwich and Winsford, with his first-time buyers typically spending between £150,000 - £200,000.

“That should get you a three-bedroom semi in Northwich,” he said.

“The £217,000 figure probably pulls in some pretty desirable villages, as well as Chester city centre,” he said.

“A 25-year mortgage for first-time buyers is pretty much a thing of the past.  

"Most are opting for 35 and even 40-year mortgages, if they’re young enough. You’ve got to have finished paying them by the time you’re 70.

“It can bring the repayments down a lot. They had to be introduced as wages haven’t been going up enough to beat house prices.

“And if first-time buyers go for 35 years, they can actually borrow more because the affordability criteria isn’t a straightforward multiple of income.

“It also takes into account income, age, dependents, and outgoings.

“And if you opt for a five-year fixed rate, lenders will also let you borrow more as a reward for committing yourself."

For those first-time buyers struggling to save for a 10 per cent deposit, Nic has some good news.  

“The chances of getting a mortgage deal with a five per cent deposit are pretty good at the moment," he added.

"Some lenders specialise in them, and can offer a free survey, as well as lender and product fee waivers.

“The rates tend to be around five-and-a-bit per cent, and can include up to £1,000 cashback towards solicitors costs.

“So, at today’s rate, £217,000 over 35 years with a five percent deposit could work out at around £973 a month.

“For those worried about committing to a 35-year mortgage, one thing to note is terms can be reviewed every time your fixed-rate period ends.

“If you’re earning more as you get older, it’s possible to reduce the term.”