First-Time Buyers – 5 Ways to get Yourself on the Property Ladder
The financial benefits of owning a property can be huge. But with the average UK property costing £232,885, just a 5% deposit could require over £10,000 in savings. This is why property experts and solicitors, abacus-law are here to share some useful ways you can get yourself on that all important property ladder.
For many who rent, moving back into your old childhood home so you can save simply isn’t a viable option. That is why you will need a stringent savings plan. Work out the maximum you can afford to save each month and transfer the money out on payday. This is so you won’t be tempted to spend it. If it means being extra frugal with your money for a few months, with your weekends in front of the TV, just remember what it’s all for.
Government first- time buyer schemes
There are a number of Government schemes aimed at helping first- time buyers get a foot on the property ladder. These include:
What is the Help to Buy: Equity Loan?
If you’re buying a new build home, you can put down a 5% deposit. The Government will then top it up with a 20% equity loan so you only borrow 75% from your mortgage lender. As the first few years are usually financially straining, you won’t have to pay anything for the first 5 years.
What is the Help to Buy: ISA?
With the Help to Buy ISA, the government will top up any savings of yours by 25%. For instance, every £200 you put away, the government will contribute another £50. This is essentially free money for first time buyers, and the most you can receive is £3000. This means the maximum you can save in a Help to Buy ISA is £12,000.
What is Help to Buy Shared ownership?
If you cannot quite afford a mortgage on the entire home, the Help to Buy: Shared Ownership scheme offers you a chance to buy a share of it. You can buy between 25% and 75% of the homes values and pay rent on the remainder. When you can afford to in the future, you can buy bigger shares.
With today’s housing climate, this is becoming an increasingly popular option for younger people looking to combine their earnings and get a mortgage. It can be a great option if your own salary isn’t enough and you want to effectively double your income. If you have a good relationship with the other person, it could be the option for you. However, this option also comes with some drawbacks. Firstly, you will only own half of the house. Secondly, if you fall out with the other person or one of you wants to move on it can create an awkward situation, both domestically and financially. You will need to carefully consider what will happen in this situation and protect your investment so you will need to get clear legal advice.
Be prepared to compromise
If you have your heart set on a certain area, but you discover the house prices are incredibly expensive, it may be time to start thinking about a cheaper area. If you are willing to do this it can make buying a house a real possibility. You never know what can happen in the future, the area may undergo redevelopment. Or perhaps you can always move to your preferred area later on when you can afford to. It is always worth taking the time to research the average house price house in various areas nearby.
Time it right
If you finally have a deposit and you are raring to go, you should still think about the timing of the purchase. Although it can be difficult to guess how the housing market will change, keeping on top of the news will help you get a feel for the market a lot better. This way you will be able to make a well-informed decision.