Is Buying Your First Home Possible?
Not long ago there was no question about whether to buy a first home. Of course you wanted one! And getting a mortgage was simple.
Today it’s a little different, but the main motivations are the same – freedom from parents, a private place you can make your own and to invest in your own future and not your landlord’s!
That said, the urgency has lifted – with property prices stagnating, the first home isn’t getting further out of reach – for now. However, for those who see this as a buying opportunity, things are still pretty pricey!
These days the solution lies in some form of co-ownership or co-financing.
High prices mean that few can afford to go it alone. However, if that’s what you want, your solution will probably lie in having parents, generous enough to make you a financial ‘gift’ for the deposit or who are able to guarantee your mortgage payments.
Alternatively you could share costs and monthly payments and buy with a parent, sibling, friend or even a new-found investor. In this instance you will need to draw up a co-habitation agreement so you know what to do in the event of someone wanting ‘out’ for any reason.
In the past, Government schemes have only been available to those who fit their definition of a ‘key worker’ but now you’d be surprised just how broad that definition is. In addition, their schemes are also open to households whose annual earnings are less than £60,000 – even if they are not key workers.
The main HomeBuy scheme is based on shared ownership, where you buy part of a new or refurbished property from your local RSL and pay them rent on the part you don’t own. There is a cost of around £3000 but mortgage lenders are generally willing to lend 100% of the part you want to buy.
The second main scheme involves shared equity where you have a mortgage for a property of your choice and you have an additional interest-free equity loan for another chunk of it. Beware, you still have to pay back the loans when you sell, plus you have to give up a proportion of the increase in value of your property.
The Government also has a new rent to buy scheme.
Helen Adams works for First Rung Now. For more information about shared ownership, shared equity, joint ownership, rent to buy, parental help and first time buyer mortgages, visit the First Rung Now link below.