Want to become a homeowner but clueless when it comes to making it happen?
Check out our how to get on the property ladder guide. There are all sorts of ways to go from tenant to owner, some of which you may be unaware of. Everyone’s circumstances are different. Don’t fall into the trap of discounting the possibility of purchasing a flat, maisonette or house out of hand. In tough economic times many people often write off buying a property. However, this may be more accessible than you might think. Help is out there. You just need to know where to look.
How to Get on the Property Ladder If You Are On a Low Income.
Ideal for first-time buyers – especially those on more modest salaries. There are shared ownership schemes in operation all over the UK especially for those who earn under £60k. Don’t despair if you live in London and can’t ever see how you could afford to buy. Part ownership could bridge the gap between renting and buying. The idea is simple – you have a mortgage on a percentage of your chosen property and pay rent on the rest. You will be given the option to purchase the remaining percentage. These schemes are usually run by housing associations and your local council will have more information on the specifics for your area. Do bear in mind that you may have service or maintenance charges to pay. You will need to factor these costs in when setting your budget.
How to Get on the Property Ladder with an Equity Loan
Another option for those on lower incomes, the HomeBuy Direct scheme is well worth looking into. This works by offering potential homeowners a loan for up to 30% of the price of a selection of new builds. The idea behind it is simple – you can use the loan as a deposit which is paid back when you sell the property. Get in touch with an agent to talk about which scheme best suits your situation and needs.
Check out the New Build HomeBuy plan as well. You can begin by buying 25% of the property and rent the remaining percentage. You may also want to consider renting a new build from a housing association. This plan works by enabling you to rent a property at a subsidised rate. Over a period of 5 years you are given the opportunity to buy during or after the rental period. This is a great way to save a deposit as your rent tends to be lower than usual.
How to Get on the Property Ladder with No Deposit
The traditional way of buying a home is to save a deposit of at least 3% of the value of the property you want to purchase. If that isn’t a possibility and you want to buy fast, it is possible to buy without a lump sum. A 100% mortgage could be the way to go. You may not get as good a rate as with other mortgages but it is a possibility. Talk to a financial advisor or broker to get the best deal.
Do however bear in mind that you will need to put some funds aside for paying solicitors’ fees, surveyors’ costs, lenders fees, stamp duty and hiring a van to move your belongings.
How to Get on the Property Ladder the Traditional Way
If schemes and loans aren’t up your street and you’d rather purchase a property the conventional way, you will need to save up a lump sum. To get the best deal on a mortgage, a deposit of at least 5% is advisable, with some lenders asking for 10% of the total price of the property you intend to buy. You will need to be prepared to borrow three times your salary. For couples buying together, the general rule of thumb is 2.5 times the sum of the combined salaries.
Whatever avenue you choose, don’t forget the following:
- An interest-only mortgage might be cheaper but you really need to switch to repayment as soon as possible.
- Parents can act as guarantors on mortgages.
- Always shop around for the best deal on a mortgage and make sure you understand the differences between all of them.
- Be honest when you’re calculating your budget. A mortgage payment shouldn’t really swallow up more than 35% of your monthly salary.
- Rent out a room to help with mortgage repayments.
- Consider moving to an area with lower property prices. You could get more for your money.