The increased cost of living has hit everyone hard, making it more difficult for most First Time Buyers to save for a deposit. However, we know there are still plenty of First Time Buyers out there capable of meeting mortgage payments, and many who do have some form of deposit. Many of these are spending a fortune on rent (potentially more than a mortgage payment would be), and rents are only increasing, particularly in London and the Southeast. Those who are able to save, are benefiting from higher interest on their savings, and house price increases are easing up slightly. Higher rates have been well documented in the news, but we look at the overall affordability of the mortgage for you. Don’t let the headline rate scare you!
Looking for your first home and initially getting your foot on the property ladder is a massive milestone in anyone’s life, but it can be a stressful journey and you may have additional costs, especially if you are unsure of what to expect.
Help take the stress of the process away by speaking to an expert. At Ingard, we are whole of market, meaning our advisers will source the whole of the market to find the cheapest and most suitable solution for you, saving you time and effort, but most importantly, helping you purchase the property you desire. We have experience working with each lender to establish how they will assess your income and calculate affordability. More and more people are turning to advisers for help, rather than trying to deal with their mortgage application themselves, and of course, many lenders on the market will not deal with customers directly, so you would already be limiting your options.
There are many different options we can look at, and one of these could be the answer you have been looking for! These include:
No-Deposit or Low Deposit Mortgages
There are some no deposit options on the market, such as the Skipton 100% Mortgage and Barclays Springboard Product. We can go through your circumstances to see if this is something you would qualify for. Many other lenders do offer 95% mortgages, meaning you would need a deposit of just 5%.
Shared Ownership
In this scenario, you purchase part of the property and pay rent on the rest of it. The stake owned can vary between 25% and 75%. As an example, if you bought a 40% share in a property worth £200,000, the value of your share would be £80,000. The rest of the property will be owned by a Housing Association, who you will then also pay rent to.
Lenders will require you to contribute a certain deposit sum and they will calculate the Loan to Value (LTV) from the value of the share being purchased. E.g., as the value is £80,000 instead of £200,000 for the full property in this example, a 5% deposit would be £4,000 instead of £10,000 so it can help you to buy a property faster!
Products with improved Affordability/Loan to Income
Some of the main lenders have introduced schemes to assist First-Time Buyers, such as the Nationwide ‘Helping Hand Mortgage’. This gives first-time buyers the option of borrowing more when taking one of their five or ten-year fixed rate mortgages.
There are also products available which can those in certain professions to borrow more, such as Teachers or Emergency Service workers.
Joint Borrower Sole Proprietor (JBSP)
This allows two or more people to be named on the mortgage but with not all applicants being named on the property deeds. This type of mortgage can be especially useful for parents or family members who want to help someone else buy a home without taking ownership of the property. The income of everyone on the mortgage is considered, which can often help with affordability. The good news is that rates can be just as competitive as standard mortgages.
Mortgages with Multiple Applicants
There are lenders who will accept applications from up to 4 people, and who can use the income from all applicants. This can help greatly with affordability, and is really useful for multi-generation purchases E.g., you may be siblings and looking to buy with your parents. There are a few lenders who do not require the applicants to be related, meaning you can buy with friends.
Complex Deposits
We have access to lenders who will accept multiple sources of deposit, deposits from close relatives, more extended family, and even none-family members in some instances. There are also different ways this can be structured to protect the donor’s funds or assets.
Right to Buy
Right to Buy is a government scheme that lets you buy your home at a substantial discount if you’re a council tenant. If you qualify for the scheme, your home will be given a market valuation and what is known as a “Right to Buy discount” is calculated based on that value, and other factors, such as where you are in the country. Housing Associations also offer a similar scheme called Right to Acquire.
Lifetime ISA (LISA’s)
These accounts offer a government bonus of £1 for every £4 you save, which can be put towards buying your first home. If you save the maximum £4,000 a year, you’d get a bonus of £1,000, giving you a total of £5,000. Certain lenders also offer products specifically available to clients who have their LISA with them, E.g., Skipton Building Society.
If you are lucky enough to have relatives who would like to raise funds on their property to assist you with your deposit, there are also a number of ways we could help them. We can look to arrange a remortgage, further advance, second charge or an equity release for them, depending on their circumstances and existing finance.
If you need advice on how to get yourself onto the property ladder, please don’t hesitate to get in touch. One of our advisers will be happy to discuss your options.
