FIRST time buyers need to fork out thousands more for a house deposit to keep their mortgage payments in line with the level they would have paid before the Iran War began.

Mortgage rates have soared since the war in the Middle East began this spring, piling pressure onto households already struggling with the higher cost of food and fuel.

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The increase means it’s now much harder for first time buyers to get on the property ladder, according to estate agent Savills.

Its figures show that a homeowner looking to buy a typical first-time buyer home, which is worth around £259,000 with a 30- year mortgage could pay up to £127 extraa month.

A first time buyer who took out a two year mortgage with a 10% deposit of £25,900 would have spent £1,159 a month on their mortgage before the war began. 

Meanwhile, they now face paying £1,286 a month.

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To bring their payments back to the previous pre-war level they would need to fork out an extra £22,973 for their deposit.

Meanwhile, those who took out a five year mortgage with the same deposit would have spent £1,178 a month on their mortgage before the start of the war.

But now they would need to pay £1,264 a month – an extra £86 a month.

To bring their payments to the previous level they would need to increase their deposit by £15,833.

For many first-time buyers, increases of this level will be almost impossible, forcing them to decide between extending the duration of their mortgage, delaying making a purchase or asking friends and family for help.

Another option is to take out a tracker mortgage, which moves in line with the Bank of England base rate.

Tracker rates are unchanged since the Iran War began as the base rate has not changed.

But this strategy could be risky as rates could rise substantially in the future.

In comparison, with a fixed-rate mortgage your payments remain unchanged for its duration.

It had previously been hoped that the Bank of England would cut interest rates this year.

But the conflict has dashed these hopes, with markets now expecting there could be several hikes.

If you’re worried about being able to afford a property now rates are higher then you could speak to the seller and try to renegotiate the property price.

But the seller may decide to go with another buyer, so tread carefully.

How to get the best deal on your mortgage

IF you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.

There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.