How To Get On The Property Ladder: A First Time Buyers Guide
The media is full of doom and gloom for First Time Buyers and how mortgage companies require such hefty deposits that no-one is able to get on the property ladder, but don’t dismay; there are still options if you are looking to get on the property ladder without a large deposit for a house.
A shared ownership/shared equity scheme allows you to buy a portion of a property (usually 25%-75%) and then rent the rest back from the developer or housing association. This means you do not need such a large deposit or mortgage. It does mean that you do not own the whole property, so there can be restrictions on what you can do with it, but you will usually have the option to buy the rest of the equity at a later date.
Buy with friends or a partner
If buying a property independently is too big a financial burden, or you do not have the funds available for a deposit on your own, you could consider buying a property with a partner, family member or friend. This will divide the financial burden and means you will each have a lesser deposit to pay to secure a mortgage.
The FirstBuy scheme the government and participating house builders, together can provide a 20% loan, helping first time buyers to get on the property ladder, without a massive deposit. The maximum loan value is 20% of the purchase price, which can be a maximum of £280,000. More information about eligibility, and the terms and conditions of the scheme, can be found on the FirstBuy website.
There are some first time buyer mortgages that will allow a guarantor to act on your behalf. This will usually be a parent, and they will need to provide a guarantee that the mortgage payments will be met on time and will mean they will be responsible for making the payments, if you are unable to do so. They will normally have to use their own property as collateral so they will need to be willing to trust you to make all of the monthly repayments. Using a guarantor means that you have extra security for the loan and you may be able to get a higher mortgage, without such a large deposit. It is ideal for parents who want to help their children get on the property ladder, but do not have the lump sum to give them for a deposit.
Low deposit Mortgages
While the days of 100% mortgages are long gone, some lenders are now offering 95% mortgages, meaning you only have to pay 5% as a deposit. It is important to check whether you qualify for the mortgage and that the interest rates aren’t too high. You will end up paying more in the long-run than if you had a larger deposit, so make sure you find the best mortgage deal on the market.
Make sure you can afford a mortgage
Buying a property is a huge financial commitment and if you aren’t in a hurry to get on the property ladder, it might be best to take some time to save up and pay of your existing debts before taking the plunge. Consider moving in with parents (if they’ll have you back!) as they will most likely charge less rent than a private landlord and will allow you to really save up.
You need to be absolutely sure that you can afford the monthly repayments of a mortgage and it is imperative that you do not commit to a mortgage if you cannot afford it. Your home is in danger of repossession if you do not keep up the repayments. This means no roof above your head, all the money you have paid is lost with nothing to show for it and a big black mark on your credit rating, which will make it nearly impossible for you to get a loan in the future. Seek reliable advice from somewhere like the Citizens Advice Bureau, or an independent financial advisor, if you are thinking of putting that first foot on the property ladder; it’s one of the biggest decisions you are ever likely to make.
National Homebuyers – We Buy Any House
National Homebuyers are a UK based property buyer who really do buy any house or property! In fact we will buy anything, absolutely anything! Whether it is a house, flat or bungalow we will buy it!
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