Here’s Why You Don’t Need a 10% Deposit to Get on the Property Ladder
Are you looking to buy your very first home? Maybe you’ve read the news and feel as though the only way for you to get a property would be for you to save up a 10% deposit. This is easier said than done when you are in rented accommodation, or if you just don’t have the time to save up this much. Either way, there are things that you can do to try and make sure that you are not putting yourself in a comfortable position. Take a look below to find out more.
What Other Options Are There Out There?
Right now, lenders are offering a maximum loan to value rate of 90%. That being said, there is the option of shared ownership.
Shared ownership gives you the chance as a first-time buyer to buy a new build or even a resale property. The purchaser of the property will pay a mortgage on their share. They will pay rent based on the remaining share. It’s important to know that as you are only buying part of the property, you only need a small amount of money for the deposit, which is substantially lower than the cost would be if you were buying a property outright. If you go through this option, you will have the chance to increase your total share at a later date. This is known as staircasing. In most cases, you can do this all the way up to 100%. You won’t pay rent at this point, you’ll just pay for your mortgage as well as any service charges.
The Help to Buy Scheme
Help to Buy is a government scheme. It’s designed to help any first-time buyers to get a property. The great thing about this is that you just need to have a 5% deposit. You can borrow up to 20% of the purchase price and this is interest-free for five years. You will be able to borrow up to 40% if you live in London. This scheme is open to applications between December 2020 and the 31st of March 2023. Help to Buy works as an equity loan. The government will lend a first-time buyer the chance to buy a new home. You have to live in the home and you can’t use it to buy a second home or even a buy-to-let property. The maximum price will depend on the region of England you live in.
Some of which can be found below:
- North West- £224,400
- North East- £186,100
- West Midlands- £225,600
- East Midlands- £261,900
- Yorkshire & the Humber- £228,100
- East England- £407,400
- South East- £437,600
- South West- £349,000
- London- £600,000
Before you look at any mortgage or property, it’s vital that you hire a mortgage advisor. When you hire a mortgage advisor, they can talk to you about the best rates and how to get the most for your money. They can also compare banks who are most likely to accept you, so you don’t have to worry about getting rejected or damaging your credit rating through having too many checks done.
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