Getting on the property ladder isn’t easy. As well as actually finding a place you can afford and want to live in, there is the small matter of raising a deposit and securing a mortgage.
However, according to figures from the Halifax First-Time Buyer Review, published in January 2017, the number of first-time buyers is on the up. In 2016 an estimated 335,750 first time buyers set up home, up 7.3% on 2015*.
An increasing number of first-time buyers is great news for the property market as a whole, as they are the lifeblood of the property market that help to keep it buoyant and moving.
Despite this, things are not always made easy for first-time buyers; rising average house prices and increasing deposits, mean that even the most determined of house buyers can struggle.
However, help is available. Read on for our overview of the first-time buyer help and schemes that are available…
Helping first-time buyers save their deposit, the ISA scheme allows savers to put money away tax free. The Help to Buy ISA scheme will close on 30 November 2019.
This scheme is for both first-time buyers and current homeowners looking to buy a new build property. There are terms and conditions to the scheme including a limit on the purchase price, but essentially the scheme allows you to borrow 20% of the purchase price (40% in London), interest free for five years.
Not exclusively for first-time buyers, the Right to Buy scheme could be a good option for buyers looking to get on the property ladder. The scheme gives council or housing association tenants the right to purchase their rented property, at a discount, providing they have been renting for three years or more.
Typically offered on new build homes, through shared ownership buyers can purchase a share (somewhere between 25% to 75%) on a property and pay rent on the rest. Funds for the share amount can be raised via savings or a shared ownership mortgage.
The London property market is one of the most difficult in the world to get into and those on lower incomes find it particularly tough. First Steps has been designed for those on lower incomes and aims to offer them affordable housing, either to buy or to rent.
While any help is useful, it is possible to get on the property ladder without such schemes. Look for mortgage lenders offering 95% mortgages, as this will give you less to save. Also consider different types of mortgages such as a family offset mortgage which is being offered by some banks and building societies. With this type of mortgage, family members put their savings into an account linked to the first-time buyer’s mortgage. This serves as the deposit and reduces interest charges. Family members can’t access their money for some time, usually until the mortgage is reduced to around 75% of the property’s value.
It is important to get independent financial advice before you commit to a mortgage or deal. An independent mortgage advisor will be able to advise on the best mortgage deals on the market for you as well as how much you can comfortably borrow.
Once your finances are in place and you have found the perfect pad to make your own, be sure to choose expert legal advice. Here at Smith Partnership our team of property solicitors and conveyancers are on hand to guide you through the process, explaining every stage in our usual jargon-free way to ensure the process is as hassle-free as possible.