The government has announced a package to help first time home buyers and those struggling to pay their mortgage. It has suspended stamp duty for houses sold for 175, 000 pounds and under. It also announced HomeBuy Direct scheme allowing those with low incomes to sell a share of their home and rent it back.

With the financial turmoil and rising food and petrol prices, many home owners are facing repossession or the possibility of approaching home purchases to buy their home and rent it back to them. The new government scheme allows those who might otherwise have their houses repossessed to keep up with payments without having to surrender their home.

Those struggling to keep up with mortgage repayments and facing repossession can sell their home to a registered social landlord (RSL) who will pay off the mortgage and then rent the property back to the occupants at a level which is affordable.

In some cases, the RSL could purchase a portion of the property, or provide an equity loan which could help to reduce the homeowners mortgage repayments. This is similar to many Buy and Rent Back schemes offered by many private companies.

The new HomeBuy Direct scheme allows first-time home buyers with a household income under 60, 000 pounds to buy newly-built properties with a free equity loan of up to 30% of the property’s value.

A spokeswoman said “We welcome the Government’s stamp duty initiative. This is a sensible measure and it will help the housing market” on behalf of Halifax. The Treasury has estimated that the one-year stamp duty freeze will cost the Government 600 million pounds.

Around half of the 90, 000 home purchases made each month are on houses worth 175 thousand pounds or less, but deals below 125 thousand are exempt from stamp duty anyway.

It seems that the government has finally stopped dithering and is committed to helping first time buyers and the market as a whole. House prices are falling, but their value at the beginning of the year was probably inflated, so they still probably have a way to fall.

A Quick Sale is the number one property buyer in the UK. We can help you with a quick property sale and find solutions to keep you in your home, through rent or buy-back options. We can help if you are facing repossession.

When Adjustables can be good

If you are only planning on staying in your new home for a very short period of time and the current trend with adjustable rate mortgages is substantially lower than that of the lowest fixed rate mortgage that you can qualify for then the adjustable rate mortgage could work out well for your situation – or if you’re exceedingly confident that nothing will make the rates rise during the duration of your stay at the home it could also be the better option – but this is practically impossible to predict.

Some people don’t mind the unpredictability that goes along with an adjustable rate mortgage, they don’t get flustered with every little fluctuation of the market and can handle the up and down trends with confidence that their rate will rebound. Owning a home can be a stressful situation, especially if it’s your first home – if you don’t think you can handle the uncertainty of your monthly payment, which could constantly be going up and down, along with all of the other common stresses that go along with home ownership – an adjustable rate mortgage may not be the best for you.

The Pros of a Fixed Rate Loan

With a fixed rate mortgage, you know exactly what you are in for – there will be no secrets or surprises when your statement comes, you bill will remain the same each month. For a first time homeowner this can relieve a lot of the stress associated with the added responsibility of paying for a home. Before you sign your name to the dotted line you can sit down with all of the facts and figures and develop a budget that you are confident that you’ll have no trouble paying. With an adjustable rate mortgage, this stability and confidence is impossible to have – sure your rate could go down, but if it goes up will you be able to still pay it? With a fixed rate mortgage this is a question that you won’t have to worry about answering.

Some people will say that being bound to an interest rate for the life of your loan can be a bad thing. The truth of the matter is, that rates often do fluctuate – they go up and down, but having a fixed rate loan isn’t like a life sentence in prison without the possibility of parole – if rates go down and stay down, you can consult your mortgage company about refinancing your loan to bring your current interest rate down. You may even be able to restructure your loan to pay less each month, while taking some equity out for necessary repairs or improvements at the same time. Locking yourself into a low rate should feel like a safety net, if you start seeing the rates drop after you’ve had your loan for a while – by all means, refinance and save yourself the money, but if the rates start to climb as the often do, you can rest easy that you are locked in at a good rate.

Your home should feel stable and secure, and with the current state of the economy in Canada things are very unpredictable. The best bet for a first time homebuyer is to shop around for the lowest rate the can find and to lock it in for the duration of the loan – that way you’ll be safe from any disasters that may occur in the near or distant future and free to make changes at a later date should they become necessary.

Compare mortgage rates in Canada from banks, mortgage brokers and other lenders with one quick search. When looking for Canadian mortgage rates, consider Rate Supermarket.

Following are the top eight mistakes consumers make when shopping for a new home:

1. Looking for a home without being pre-approved.

Potential buyers who are competing for a property have a better chance of getting an offer accepted by being as prepared as possible. Imagine a seller who has received multiple offers for the purchase of their property. When an offer is made, the seller is being asked to take the property off the market. However, without pre-qualification or pre-approval, the seller has no evidence that a potential buyer can actually afford the property.

A buyer who is pre-qualified has met with and informed a broker or lender regarding their income, expenses and liabilities. The broker or lender may have also seen the buyer’s credit report. By undergoing a pre-qualification process, buyers are able to provide a letter stating a broker’s professional opinion of what the buyer can afford.

Buyers who are pre-approved have provided a broker or lender written evidence of income, expenses, assets, liabilities, and credit. All information has been verified by the lender. As a result, much of the paperwork for a loan has been completed. Therefore, a pre-approved buyer will probably be able to close quickly. In addition, the seller will have more certainty that the buyer can close the deal. For these reasons, pre-approved status may give the best chance of getting an offer accepted and this may be critical in a competitive situation.

2. Choosing a lender because they have the lowest rate.

While the rate is very important, buyers should consider the total cost of the loan including the loan fees, discounts and origination points. When receiving a quote from a lender or broker, it is appropriate to insist the discount points be distinguished from origination points.

The cost of the mortgage, however, shouldn’t be one’s only criterion. It is also important to have confidence that the selected company is reputable and will deliver the loan with the terms and costs they promised. If in the final hours of the transaction, it is determined that the lender has suddenly increased their profit margin at the buyer’s expense, there may not be time to start again with a different lender. Buyers should ask family and friends for referrals, as well as interview prospective mortgage companies.

3. Not receiving a good faith estimate.

Within three business days after the broker or lender receives a loan application, the applier must receive a written statement of fees associated with the transaction. This is both the law and the best way to determine what one will pay for the loan. A buyer should bring the Good Faith Estimate (GFE) when signing loan documents. Furthermore, buyers should not be expected to pay fees which are substantially different from those contained in their GFE.

4. Not getting a rate lock in writing.

When a mortgage company informs a buyer that they have locked a rate, it is important to get a written statement detailing the interest rate, the length of the rate lock, and program details.

5. Using a dual agent, or an agent who represents the buyer and the seller in the same transaction.

Buyers and sellers have opposing interests. Sellers want to receive the highest price; buyers want to pay the lowest price. In the standard real estate transaction, the seller pays the real estate commission. When an agent represents both buyer and seller, the agent can tend to negotiate more vigorously on behalf of the seller. Buyers may be better off having an agent representing them exclusively.

6. Purchasing a home without professional inspections.

Unless buying a new home with warranties on most equipment, it’s highly recommended to get property, roof and termite inspections. Inspection reports are great negotiating tools when asking the seller to make needed repairs. When a professional inspector recommends that certain repairs be done, the seller is more likely to agree to do them.

7. Not shopping for home insurance until ready to close.

Start shopping for insurance as soon as there is an accepted offer. Many buyers wait until the last minute to get insurance and do not have time to find the best possible deal.

8. Signing documents without reading them.

Whenever possible, buyers should review in advance the documents they’ll be signing. While some specifics of the transaction may not be known early in the process, the overall documents are standard forms and are available for review.

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As a result of the US subprime crisis and the ensuing credit crunch, the housing market throughout the UK has begun to go into free-fall, with property prices down approximately 10.9 percent in August in comparison to the same stage last year. The aim for the Treasury is to help first-time buyers into the market, who are already restricted by the slowdown of mortgage acceptances and the demand for large deposits.

News of the rise in threshold of stamp duty will therefore come as a welcome relief to potential homeowners up and down the country. However, first-time buyers remain hindered by a number of factors when attempting to raise finances to purchase their first home:

1. Rental costs. The costs of renting a property has risen in accordance with the downturn of the housing market. As owners are faced with sharp increases in interest rates thanks to the expiration of introductory offers on buy-to-let properties, tenants are often footing the bill for the increase in mortgages. Subsequently, the ability to save for a deposit is hindered.

2. Disproportionate wages. National surveys are often telling us how the average UK wage is in excess of GBP23,000. However, the accuracy of this figure is far from correct with the calculations distorted by those with significant wages packets offsetting those with more limited income. House prices have escalating rapidly over the past decade, continually moving away from the affordability of those on smaller incomes.

3. Existing debt. Student loans, utility bills, cars, credit cards bills and countless other ‘luxuries’ have led many to accrue significant debts that need repayment. Coupled with wages that provide less expendable money, little if any savings can be put aside for a deposit.

4. Deposits and mortgages. The advent of the credit crunch has seen many mortgage lenders dramatically rethink their lending policies. No longer are first-time buyers being offered 125 percent mortgages or even 100 percent mortgages. Accordingly there is a requirement for buyers to put down a significant deposit – usually ranging from 10-25 percent – before mortgage companies will lend the remainder of the house value.

5. Solicitors fees. The process of purchasing a property is one of the most stressful periods of anybody’s life with pages of legal documents to wade. Accordingly, solicitors are in place to handle the pages and pages of paperwork involved over the course of the purchase. This is, however, another expense that can amount into the thousands, eating away at the buyer’s deposit and affecting the amount required as a mortgage.

These points detailed above are, of course, just a number of factors that affect first-time buyers as they look to enter the property market, and individuals everywhere can probably add many more. So although the raising of the stamp duty threshold will come as a relief to many, the battle to get on the property ladder remains fraught with difficulty and financial hardship.

Max Clarke is a copywriter for holiday services company, Holiday Extras, currently writing about Gatwick airport parking, Manchester airport hotels, Heathrow airport parking and UK music.