Caution – it’s a mortgage minefield out there!


The current mortgage market is like a minefield with unwary house-buyers not knowing where to tread next.

Even for someone like me, the ever-changing lending landscape is a daily puzzle.

Despite the apparent upturn in the housing market, mortgage providers are still nervous about lending money – particularly to first-time buyers.

This means that lending criteria – the rules mortgage providers apply when deciding whether to give you a loan for your home – are forever changing. Not only that, but they vary from lender to lender.

It all stems from the current economic uncertainty, and mortgage lenders worrying that they won’t get their money back.

Some providers, for example, are nervous about lending to the self-employed and are looking for more and more evidence that you will be able to pay the loan back. If you have had Government support during the lockdown, they are even more wary.

Lenders have also been changing the way they view gifts – money given to a family member, for example, to help them get their first home. One of the very few lenders currently lending with a 10% deposit is stipulating that the gift can only be 25% of the whole deposit – so if you are buying a £100,000 house with a 10% deposit i.e. £10,000, only £2,500 can be a gift. This same lender also restricts the maximum term to 25 years as well with a 10% deposit.

Despite this, there’s something of a housing boom going on at the moment with demand for houses increasing and prices rising too. To such an extent that some lenders have started increasing their interest rates, worried about excessive demand and a possible bursting of the bubble come spring.The cost of an average two-year fixed-rate mortgage – which had an interest rate of 2 per cent in June – now stands at 2.24% and five-year fixed rates have gone up from 2.25% in July to 2.62% now.

The picture is further confused following the Prime Minister’s announcement last week that the Government is to back lenders to offer first-time buyers a mortgage with just a 5% deposit – pretty much unheard of at the moment. We wait to see how and when this is going to come into play.

So all in all, it’s a confusing mortgage market out there and definitely not an easy place to be, unless you happen to have bags of cash in your pockets as a handsome deposit, in which case the world is your oyster.

For everyone else, there is a need for caution and, if modesty allows, a real need to get advice before you sign on the dotted line for your mortgage and home.

For a free, no-obligation discussion on this or any other mortgage or insurance-related issue, please give me a call on 01723 384558 or 07767 692 653 or email me at

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