Hey Skint pals,
Hope that you’re all doing well. Today I’m looking at a big subject and a thorny one: how to get onto the property ladder.
In the last couple of weeks two of my friends have been turned down for mortgages. They’re not first time buyers. They’re professionals with two mortgages each behind them already, good careers and credit histories. The trouble was that they wanted bigger homes for growing families, and lenders are so cautious these days. It got me thinking: what chance do first time buyers have? How do you get onto the property ladder if you’re starting out in your career? Here are some tips:
Help to Buy: In recognition of the problem the government recently launched its Help to Buy scheme which is open to anyone wanting to buy a new-build home. The scheme helps out with the cost of putting down a deposit – often the stumbling block for so many – and crucially it’s available not only for first time buyers but to anyone, so it could have helped out my pals and people like them. The hitch for many? It’s only available on new-build homes – and if there’s not many of those in your area (or you just don’t like new builds) the help isn’t there. But, if you’re after a new home and are having trouble saving for a deposit it’s potentially a great help. Buyers need only come up with 5% if the deposit and the government will boost that by 15% in return for a fee paid by the lender. So far, just three lenders are taking part; NatWest, Halifax and Royal Bank of Scotland.
New Build Home Deals: The Help to Buy scheme aside, many of the larger housebuilders offer their own incentives. A friend of mine traded in her home for a newer one with the same builder, thereby reducing the level of deposit that had to be paid, as well as eliminating estate agent fees etc. And if you’re looking for your first home, many housebuilders offer deals that let you move in with a very small deposit: it’s often a condition of them being allowed to build in the first place. If you see a new development that you like the look of, ask about your range of options – there may well be help like this available.
Lender Schemes: Several lenders offer specific schemes designed to help people get onto the property ladder, such as Lloyd TSBs Help to Buy scheme. You can find out more about the schemes, as well as a handy round-up of tipson getting on the property ladder on the Totally Money site here. (The site also offers a mortgage tool which outlines exactly how much your mortgage will cost you every month based on your personal circumstances, including fees.)
Buy With a Friend: Buying with a friend or a family member is growing in popularity as a way to get a foot on the property ladder. Less deposit, less mortgage, and splitting the cost of furnishing the home – that’s all the good stuff. The tricky part is the legalities: you must be crystal clear about all parties are names on the mortgage. Will you take a joint mortgage with each of you assuming sole responsibility should the other person fall of hard times? Or will you both be named as tenants in common, separately responsible for your share of the payments? In short, you need the fine print to be watertight – and you need a good exit strategy, should your friend’s household habits clash disastrously with your own!
Buy at Auction: Homes Under the Hammer, anyone? Buying a home at auction is probably the cheapest way to do it. BUT, remember there’s a reason why these places are at auction: they’re rarely in great condition. This is one for people with building skills or contacts. You will still need a deposit, but prices at auction are so much lower so you can expect to be paying less.
What your experience of getting onto the property ladder, Skint pals? Anything you’d like to share?
Photo credit: extraviganzi