Written By Carol Richardson
With the cost of living and house prices rising, many people are wondering how they or their relatives will be able to save enough for a deposit in order to purchase their first property.
Saving for a deposit is the biggest issue for most First Time Buyers who will need, at the very least, a 5% deposit when making your first purchase. With the average house price in England being £288,1301, a 5% deposit on this price would still amount to over £14,000. Borrowing a high percentage of the property value in this way means that the loan is seen as a higher risk by the lenders, and therefore comes with a higher interest rate.
Although getting onto the property ladder can be challenging, there are schemes currently on the market to help with a deposit or to increase borrowing capacity that you might not have been aware of, and that can help you or a family member in purchasing their first home.
Deposit Unlock
This is a brand-new scheme devised in collaboration with lenders and the housebuilding industry which enables first time buyers and existing homeowners to purchase a new-build home with a 5% deposit. This scheme can provide competitively priced mortgage products and makes buying a new home more affordable.
Help To Buy
Equity Loans help first-time buyers in England onto the property ladder with the government lending them up to 20% (up to 40% in London) of the purchase price of a new build home.
Shared Ownership
A part rent, part buy scheme that will enable you to buy a share of between 10-75% of a new build home and then pay rent on the rest.
Gifted Deposit
This is when a close relative (e.g. parents or grandparents) gift a sum of money in a non-repayable sum towards the house purchase deposit. In order to do so, the gift giver will be asked to sign a document confirming this gift at time of purchase in order to verify the funds.
Joint Borrower, Sole Proprietor
This is a scheme offered by some lenders to help increase the borrowing capacity of the buyer. It is a type of mortgage where not all parties to the mortgage are legal owners of the property. For example, if there are two borrowers in the scenario both will be mortgage borrowers, but only one will be named on the title of the property.
Young Professional Mortgages
These are designed for young people who have just started in their careers and have the potential to achieve a high level of salary in the future. This enables lenders to offer a more generous borrowing capacity as there is the prospect of the higher salary. Examples of occupations lenders will consider for a young professional mortgage include dentists, engineers, medical doctors, solicitors, teachers and accountants.
If you or a relative are looking to get on to the property ladder and would like to discuss your options, please do not hesitate to get in touch with one of our specialist Mortgage Advisers today on 01494 509 666.
Source:
1. GOV.UK, 2022
Written By Carol Richardson
