Worried that the credit turmoil will mean you can't get a mortgage? There are still good deals out there for teachers if you know where to look, says Alison Brace
The current instability of the housing market has forced two-thirds of prospective buyers to delay buying their first home. According to research by Abbey, Britain's sixth biggest bank, they are being put off by lenders demanding big deposits and high rates of interest.
Only a year ago, mortgages worth up to 125 per cent of the property's value were available. Today these deals have disappeared as banks and building societies take cover to protect themselves against a downturn in the property market in the wake of the global credit crunch.
But if you are a teacher, there is some good news. In these financially volatile times, there are deals out there specifically tailored to your needs.
The Teachers Building Society, for instance, continues to offer a 100 per cent mortgage despite the tightening up of the housing market over the past few weeks.
The society, set up by the National Union of Teachers in 1966, prides itself on looking at each mortgage application on an individual basis, weighing up a teacher's financial situation and their needs.
The building society helped Amanda Linssen, a foreign languages teacher from Southend-on-Sea, buy her first property last December. After teaching abroad for 11 years, she found that high-street lenders would not give her a mortgage because she didn't have a credit rating.
"I was just shocked," says Amanda, 37, who teaches at Southend High School for Girls, and also carries out outreach work in local primary schools. "I kept being asked about my debts and I said I didn't have any. I was told I had to have some debt to have a credit rating."
The Teachers Building Society was prepared to help and offered her a three-year fixed rate deal over 35 years for 90 per cent of the pound;121,500 cost of her one-bedroom home.
"I'd looked around at properties to rent and realised that there was only going to be about pound;100 difference between renting and having a mortgage. Buying seemed like the sensible thing to do," Amanda says.
Some other lenders are also targeting teachers, as a way of streamlining who they offer their best mortgage deals to.
Scottish Widows, for instance, has a professionals-only mortgage package. But the 100 per cent five-year deal with a fixed rate of 6.69 per cent will cost you pound;1,999 to arrange.
Dunfermline Building Society is offering a 110 per cent mortgage to teachers and other professionals - but just in Scotland. Their cheapest deal of 6.19 per cent, fixed for two years, has an arrangement fee of pound;1,750.
"This means that teachers have some mortgage deals available to them that they would not have access to if they weren't a teacher or professional," says Ray Boulger, senior technical manager at John Charcol, an independent mortgage advice company.
But he says it is important that you do your sums before opting for a deal with a whopping flat-rate fee.
"You've got to look to see if it's worth paying a big fee or not - and that depends on the mortgage," says Ray. "Paying a big flat-rate fee for a lower rate on a large mortgage can make sense, but if you are taking out a small mortgage, then a big fee might not be worth it."
Bear in mind too that the Financial Services Authority (FSA) warns that three factors may spell trouble for homeowners if house prices begin to fall.
These are: taking out a mortgage for more than 25 years, having a mortgage for more than 90 per cent of your home's value, or borrowing more than three and a half times your income.
So try and work out your financial comfort zone before stepping on to the property ladder. Always seek sound financial advice. You can find a fully qualified independent financial adviser in your area at www.unbiased.co.uk or contact independent mortgage advice companies such as London and Country or John Charcol. The FSA's Money Made Clear website also has useful advice. See www.moneymadeclear.fsa.gov.uk.
Ironically, a downturn in house price confidence can be a good time to be considering buying your first home. "In this market, you can afford to be quite aggressive and put in a relatively low bid," says Ray. Sellers stuck in a stagnant market are often prepared to take a lower offer
All prices were correct at the time of going to press. For more information visit: Teachers Building Society www.teachersbs.co.uk John Charcol www.johncharcol.co.uk London and Country www.lcplc.co.uk.