Tuesday, 16 September 2014

Help available to get you on the first rung of the property ladder

Image from www.prestonbaker.co.uk/
With the average age of first time buyers pushing 30 years old, and many turning to the Bank of Mum and Dad for assistance, how can people realistically get on to the first rung of the property ladder?

The Government’s answer to the problem was to introduce the Help to Buy scheme, which was launched in April 2013. It offered Government-backed assistance to first-time buyers and those moving up to a larger property.

The Money Advice Service hosts detailed information about the Help to Buy scheme, and how you can access it as a first time buyer.

According to What Mortgage, in March 2014, the average first time buyer deposit reached £27,500. The Help to Buy scheme can help ‘top up’ deposits to enable people to reach the required down-payment. There are two ways in which the scheme can work:

Equity loan - The Government lends you up to a fifth of the value of a new-build home. Like other loans, this money is repayable and full details can be found at www.gov.uk

Mortgage guarantee – The Government guarantees part of your mortgage if you only have a small deposit (at least 5%). This guarantee applies to both new and pre-owned homes

Both of these schemes are time-limited, with the equity loan scheme intended to run until 2020 and the mortgage guarantee scheme running to 2016 – although either scheme could be withdrawn earlier.
There are other alternatives if you’re looking for your first home, such as shared ownership, in which you pay a mortgage on part of the property and rent on the rest. Details of schemes vary and you do have the option to increase your share in the property over time.

You may also qualify for ‘key worker’ schemes if you work in certain sectors. Schemes vary from place to place, but generally those roles which qualify include teaching, nursing, fire and police services. Your local authority can let you know whether you qualify and which schemes are operating near you.

Some developers also offer incentives and deals for first time buyers, but again these vary widely and range from the provision of ‘extras’ such as carpets and fittings, to help with Stamp Duty and everything in between.

Whichever route you take, buying your first home is probably the biggest financial commitment you’ll make and it’s worth taking time to plan it and understand the full costs. Some websites offer useful online mortgage calculators, which can help you make sure you’re accounting for everything.

Disclosure: This collaboration post is written by Sophie Davidson