So you want to get on the housing ladder, make sure you start building your personal wealth and stop throwing money down the drain on renting a property?
Many will say easier said than done and they will be right as it is undoubtedly much harder to get a first time buyers mortgage these days. However, there are a few things you can do to help and one of them is checking what help is available to you.
Here is some information on government schemes available for first time buyers:
- Help to buy: This is scheme was put in place to help both first time buyers and homeowners who can only stretch to a limited deposit. Essentially you can borrow 20% of the purchase price interest-free for the first five years as long as you have at least a 5% deposit. The scheme limits the property purchase cost to up to £600,000 and T&Cs vary across the UK.
- Right to buy/right to acquire: This scheme is designed to allow tenants who rent council owned property to purchase them at reduced cost. Tenants who were living in a council home before it transferred to another landlord such as a housing association, might be eligible to buy their home under this scheme. Usually, tenants must have rented from the public sector (i.e. local council or housing association) for three years before they can buy under these schemes.
- Shared Ownership: Shared ownership is where you buy a share of a home from the landlord, who is usually the council or a housing association, and rent the remaining share. You need a mortgage to pay for your share, which can be between a quarter and three-quarters of the home’s full value. You then pay a reduced rent on the share you don’t own and when applicable you can buy a bigger share in the property up to 100% of its value.
- Starter Home Scheme: In March 2015, the Government announced the launch of a new Starter Homes scheme. The Starter Home scheme is a new government plan, where 200,000 new build homes are available to first-time buyers under 40 years old with at least 20% off the market price.
- Life Time ISA: The recently-launched Lifetime ISA offers a tax-free boost of up to £1,000 a year towardseither buying your first home or saving towards retirement. Savers aged 40 or under can open one of these accounts and put away up to £4,000 each year. The Government will then boost returns by 25p for every £1 saved and pay the bonus directly into the account. You can opt to use your Lifetime ISA as a deposit on a property worth up to £450,000 anywhere in the UK, so long as you are a first-time buyer.
That said, it is still possible to get on the housing ladder with only a small deposit without a leg-up from these types of schemes. Mortgages that are not backed by the Government are available for deposits of between 5% and 10%. And some may even offer a better rate or terms for your personal circumstances.
I hope this has given you a better understanding and will help research and considerations. Should you want some advice or need some immediate help, visit our website for more information or get in touch to arrange an initial appointment at a place and time to suit your busy schedule.