As UK house prices soar and average wages fail to keep pace, it’s becoming increasingly more difficult for young people to get onto the property ladder and they must resort to renting. However, for investment purposes, it is certainly worth scrimping and saving to buy a house. It may sound daunting, but there are several ways it can be done.
If you don’t earn a particularly high salary and house prices in your area are expensive, you may want to consider shared ownership. As the name suggests, this subsidised system allows you to buy a share of your home and pay rent on the rest. If you then happen to have the money in the future, you can buy the remaining share. In buying anything between 25% and 75% of your property, your mortgage repayments and deposit requirements are less. If you ever want to move house and sell your property, you will have to share your proceeds with the housing association.
Saving for a deposit can be tough, which is why the Government’s Help to Buy scheme is another fantastic option if you want to get onto the property ladder. The scheme allows you apply for a 20% equity loan and purchase a property with a 5% deposit. This means that you’ll only need a 75% mortgage, which involves cheaper repayments. The loan is interest free for five years, followed by a 1.75% interest.
As well as the options already discussed, there are many other ways you can work towards your goal of buying your first home. Have you considered moving in with your parents or other family in order to save for a deposit? Many property developers will offer an incentive for purchasing, such as paying your stamp duty or legal fees, throwing in white goods or furniture or allowing you to pay your deposit in instalments.
Then of course there is always the Bank of Mum & Dad. Parents are predicted to lend more than £6.5bn this year to help their children get on the property ladder as first-time buyers continue to struggle to afford homes. This is a 30% increase on the £5bn loaned in 2016, according to research published in May 2017 from the Centre for Economics and Business Research. This means parents will be involved in more than 25% of UK property transactions. In fact, in London alone, 40% of homeowners had received financial help from their parents to buy their property.
If you’re considering buying your first home, it’s a good idea to do your research and find out all of your options. For clear independent whole of market mortgage broker advice, we would be happy to recommend John Demetriou based in Southgate. Please contact him by email at firstname.lastname@example.org or call him on 020 892 02830.
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