Getting on the property ladder as a first-time buyer is an exciting and often overwhelming process. There are so many options available to help you get your foot on the first rung of the property ladder, and here, we are going to briefly look at a few of the first-time buyer options in our first-time buyer's mortgage guide.
The 95% Mortgage Scheme
One of the biggest problems facing many potential homeowners is getting a deposit together, especially if they are currently renting. Fortunately, many banks and building societies have recognised this and now offer a generous 95% mortgage. Coventry and Skipton are two of them, as are the Bank of Ireland and Accord Mortgages. Others will be starting to offer them over the coming weeks and months to provide additional help for first-time buyers.
Help To Buy Equity Loans
As of the time of writing, this will be running until 2023 and involves giving first-time buyers a government loan towards the purchase of a new-build home. This can give the buyer up to 40% of the purchase price, depending on where you live. While this scheme is a great help for first-time buyers in the UK, it is essential to remember that the loan will be factored in, affecting the mortgage you are offered when calculating your affordability. The scheme's loans are interest-free for the first five years; after that, you will have to start paying interest. You may pay the loan back at any time, but certainly when the house is sold, or the mortgage is paid off.
Shared ownership has been touted as an ideal solution to buying a house as a first-time buyer.
You purchase a share of a new construction or resale property – generally between 25% and 75% – and pay rent on the portion you don't own. If it's flat, you'll still have to pay a service fee to cover the building's upkeep. One benefit of the scheme is that, since the buyer only requires a mortgage for the share they're buying, the deposit required is typically much lower than for a traditional home purchase. The rent is lower than the free market rate, which is normally 2.7% of the property's value each year.
Rent to Buy Scheme
In a rent to buy scheme, first-time buyers pay an affordable amount of rent on a new build home for up to 20 years so that they can save up for the deposit to eventually buy it. Providers usually work alongside housing associations and councils, and most residents are key workers with links to the locality.
For more information on taking your first steps onto the property ladder, contact the experts at Bowsers Solicitors today.
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