Can’t afford your first house to buy in the UK?
Getting on the property ladder is the primary goal of many under 35s (and some over that age too). It has become more common to rent for long periods of time before putting down routes. Whilst there are several reasons for this, what you really want to know is how you can obtain your first home.
It may seem like an impossible dream, but there are several schemes in places that can help you buy a home so we’ve summarised a few of the most popular below.
We also recommend booking an appointment with our dedicated mortgage advisers, who independently look at the whole of market to find a great deal that matches your circumstances. You can book a mortgage advice appointment here now.
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So how can you afford your own home?
The first thing to do if you don’t think you can afford your own home is talk to a mortgage advisor. Our team are rarely not able to find a mortgage for someone, even if they have a low deposit or a number of debts.
Why not talk to someone today, for free? It only takes 5 minutes and we can respond via phone, email or in person. Appointments are free of charge and can be made at almost any time to suit you. You’ll be surprised at what you can potentially afford even in your current situation and you may be putting an offer in on a house in no time at all.
Be quick though! Mortgage interest rates are expected to rise soon and deals could change.
Some of the below schemes may help you in affording to buy your first house.
Help To Buy Scheme
- Equity loan
- You own a share of the property and can increase it over time
- Pay rent on the part you don’t own
- Own with a smaller deposit
Help to Buy is an affordable home ownership scheme launched by the government. In a nutshell you will only own part of the property and pay rent on the rest. This scheme is most popular amongst those who can afford to pay a mortgage but can’t afford to save up a substantial deposit.
It enables you to buy a percentage of the property (for example 25%) which means you can buy with a much smaller deposit. For example on a £100,000 property this would mean a deposit of only £2500 for a 25% share. Whilst you pay into your mortgage you can set aside a little each month to save for a larger deposit, or you can increase your mortgage once you’ve paid some of it off.
You can eventually extend your share to 100%. It’s an excellent way to get on the property ladder if you’re struggling to save your hard earned money. And the best part is, although you’ll be paying rent on the part of the property you don’t own, you’ll still be building up equity in the part you do own.
Help To Buy ISA
- Get up to £3000 towards your first home
- For every £200 you save the government gives you £50
- For first time buyers aged 16 and upwards
- Couples can each have an HTB ISA
- Used on property costing under £250,000 or £450,000 in London
The help to buy ISA was introduced in the UK last December. The aim of the scheme is to give first time buyers a helping hand towards getting a mortgage and rewarding you for your diligent saving at the same time.
You can open the account with a maximum deposit of £1000 and you may save up to £200 every month thereafter. You will be given a maximum of £3000 which means if you can save £12000 you will be eligible for the maximum bonus amount giving you a deposit of £15000.
Couples are treated separately so if you and your significant other choose to buy a house together you will both be eligible for the bonus and have double the money to put towards your mortgage.
- Own your own home with a smaller deposit
- Typically higher interest rates
- Deposit of at least 5%
Whilst this isn’t technically a scheme, the availability of 5% mortgages has become more and more common over the last few years. Because many would be first time buyers rent, they have less disposable income to put towards a deposit.
The 5% mortgage makes owning a home more accessible than ever. There are some drawbacks with this method, you are likely to pay a higher interest rate because of your loan to value ratio; however it will afford you the opportunity to put money into your own home rather than spending it on rent.
You can then formulate a plan to save a further deposit and overtime you can pay off chunks of your mortgage and potentially reduce your interest rate.
Many first time buyers do this and accept a mortgage with the maximum term length and high interest rates. The reason for this is the monthly repayments become less and when they receive a pay rise or save up a large sum of money, they are then in a position to renegotiate their mortgage for a lower rate and a shorter term.
A very sensible move. Not all banks offer a 5% mortgage though and some may demand a guarantor so be sure to do your research.
Find out if you can actually afford your own home
Fill in your details for us to offer some free advice, no matter where you currently live or what your current financial status is.
Visit our Financial Services page to book a phone or in-person appointment now, to see how much you can borrow on a house whatever your circumstances!
If you’re a first time buyer looking for a reasonably priced home in the Nottinghamshire area, why not have a browse at those on offer from Walton & Allen? Click here to find your dream property.
View our video blog with Paul, mortgage adviser in Nottingham.
We also have a first time buyers video guide for those who are looking to get on the property ladder. Watch here.