Good things come to those who wait. But sometimes we just don’t want to, or can’t, wait.
For one reason or another you are in a hurry to get your foot on the first rung of the housing ladder. Here are some things that you can do that may help you to get on the housing ladder more quickly.
1. Save for a deposit
2. Research guarantor mortgages
3. Enrol in the Help to Buy Scheme
4. Take out a Help to Buy ISA
5. Apply for a Help to Buy equity loan
6. Consider a shared ownership scheme
7. Join forces and buy with someone else
8. Make a withdrawal from the bank of Mum and Dad
9. Look out for developers’ incentives
The most time-consuming part of getting on the property ladder is saving for a deposit. Once you have decided to buy a house start saving. Stop all unnecessary spending, cut out the luxuries and get saving.
If you can’t save or don’t want to wait there are a few options open.
It is possible to get a mortgage without a deposit, otherwise known as 100% loan to value mortgage.
Guarantor mortgages are designed for first time buyers, people a small deposit, people on low incomes or people with a credit history that would usually discourage lenders from loaning money.
You will need to nominate someone who can guarantee to make your mortgage repayments if you can’t for some reason. The guarantor doesn’t have title to the property you’re buying so they will need to either put their own home up as security or place a lump sum of their savings into an account held be the lender from which they are unable to withdraw for an agreed length of time or until you have paid off an agreed amount of your mortgage.
A family member or a friend can be guarantor, but they will need to own their own property out right or sufficient equity in it to satisfy the lender, have a high enough income and have an excellent credit history.
Also known as a Family/Springboard mortgages there are a number of providers who offer them including Barclay’s and the Post Office among others. However, you need to do your research because some of these mortgages are not suitable if you are buying a new build home.
A Help to Buy scheme allows you to own 100% of a new home with just a 75% mortgage and a 5% deposit. The remaining 20% of the purchase price is paid for through an equity loan from the government (subject to approval).
The equity loan is interest-free for 5 years and can be repaid at any time or on the sale of the home.
This means you have to take step #1, save for a deposit. But help is at hand.
A Help to Buy ISA is a government backed scheme where it will top up your savings by 25% up to a maximum of £3,000 and you don’t have to pay it back. To be eligible the home you buy must not cost more than £250,000 (this goes up to £450,00 in London). It must be the only home you own, and it must be where you intend to live.
The first payment you make to your ISA can be up to £1,200. You can then pay up to £200 each month. When you buy your property, your solicitor or conveyancer will apply for the extra 25%.
This is a low interest government loan towards your deposit.
To qualify for this kind of loan the house you buy must be a new Build. Visit one of our show homes for inspiration [www.larkfleethomes.com/larkfleethomes].
You buy house priced up to £600,000. It must be your only homes and must not be sub-let or rented out after you buy it. You must also demonstrate the t you can’t afford the house and deposit without this assistance.
You will need to save a 5% deposit. The government will lend you up to 20% and you will need to get a mortgage of up to 75% to fund the rest of the purchase price.
The home you buy must be purchased from a Help to Buy builder such as Larkfleet Homes.
There is a loan fee, but you will not have to pay it for the first five years. The fee in year 6 is 1.75% of the loan’s value. It will then increase annually according to the Retail Price Index plus 1%.
Fees don’t count towards paying back the loan. You will need to pay back the load after 25 years, or when you sell the home and the amount you pay back will depend on how much your homes is worth.
Government-backed shared ownership mortgages aim to help lower income households and first-time buyers purchase a property. You can take out a mortgage for the share you own (usually between 25% and 75%), while paying rent on the rest.
You can buy a home through shared ownership if your household earns £80,000 a year or less and you’re a first-time buyer, you used to own a home, but can’t afford to buy one now or you’re an existing shared owner.
Shared ownership properties are always leasehold, which means that you only own the property over a fixed period after which the title to the property reverts to the freeholder- usually a housing association or the developer.
Clubbing together with a friend or a partner will boost your buying power. You will be able to afford a bigger deposit between you and you may be able to purchase a better home than you might have been able to on your own.
There are some important considerations when buying with a friend. Work out what you can each afford, which may not be the same. You will then each be paying a different proportion of the mortgage and therefore have disproportionate shares in the house when you come to sell the property.
Be up front about each other’s financial position and fully discuss what will happen if someone wants out of the arrangement and to move away for whatever reason.
It might be a good idea to try renting together first before committing to buy a home so that you get to know whether you will be able to live to together or not.
Many parents are willing to give their children a helping hand in life. This extends from help with their school work to helping them out financially when they are looking for big ticket purchases. And there are none bigger than buying a first home.
If you are considering helping your child to buy their first home, we have put together a list of things that you should consider before taking the plunge.
First, can you afford it? According to recent research, over one third of respondents to a survey said they can’t, and another third said they have not and do not intend to offer financial support to children and grandchildren to help them get on the property ladder.
Your parents will need to consider terms and conditions, how much they are willing to lend, tax implications, the possibility of future financial hardship, the impact of falling house prices and relationship changes.
You can find more about this on our website here.
Some developers will provide offers, particularly for first time buyers which may include things like TVs, broadband, a choice of décor and appliances. They may also offer to pay legal fees and Stamp Duty for you.
This will save you a lot of money in the long run and set you well on your way to owning your first home.
Visit one of our show homes to explore all your buying options in more detail.