Are you constantly hearing that it is too difficult these days to become a first time buyer? That the UK is in the grips of the worst housing crisis since the Second World War?
If you have given up your dreams of owning your own place, we are here to help rebuild your property dreams.
Read on and discover how you can own or be on the path to own your own home before the end of 2018. And no, you will not have to live off tins of beans and tap water to save for that humungous deposit. Read on. Plan it. Own it.
Consider Social Housing
For the previous generation, buying a house meant putting some money aside and maybe getting a 100% mortgage. Basically, as long as you had a good credit history it was a lot easier to lend money and easier to get on the property ladder than it is today.
The financial disaster of 2008 drastically changed the way we buy our homes. Amongst other issues, it resulted in banks having to review the way they offer loans and mortgages.
100% mortgages were wiped out almost overnight. Anyone buying a home now needed a hefty sum for a deposit, often around 20+% just to get started. That takes some saving.
Is it any wonder that becoming a homeowner has become more of a nightmare than an achievable dream?
Thankfully, there has been a rise in social housing schemes offered by housing associations and the government. If you haven’t considered it before, now is the time.
What is social housing?
If you thought social housing was only for those on benefits you must read on. It is so much more! Further, many of the houses available are incredible.
Social housing is when homes are made available by housing associations or government backed schemes. Homes are specifically available for local individuals of a certain income who want to buy.
Take a look at shared ownership properties being advertised on our platform to give you an idea of what is on offer.
The two main ways of purchasing a home termed as ‘social housing’ is via shared ownership or via the Help to Buy scheme.
Shared Ownership – What you need to know
Put simply, shared ownership means that you are buying a share of between 25-75% of a property. The remaining share will be owned by a housing association. Each month you pay a combination of mortgage and rent. You will have the option to purchase more of the property as your finances increase over time meaning you could eventually own the property outright.
Many people find that their combined mortgage and rent for their shared ownership property is less than the rent they are currently paying.
The eligibility for shared ownership varies in countries in the UK. Your combined household income must be less than £80,000 (in London, it’s less than £90,000). Generally, it is for first-time buyers or those who used to own a home but can’t afford one now.
Many of the homes are purpose built new build properties. So there is no need for large renovation costs or repairs. You will honestly be pleasantly surprised by what is on offer.
Help to Buy – ISA
Help to Buy is the government’s way of helping you get your money together to buy your home.
There are two variations of help to buy. The first is a Help to Buy ISA.
If you are able to save some income, are a first time buyer and have not yet invested in an ISA in the current tax year you could be eligible.
The government will provide a 25% cash bonus of up to £3,000 on your savings. If you and your partner are both saving, you can potentially receive a maximum of £6,000 towards your property.
The funds are requested by your solicitor during the completion of the property purchase and put towards your costs.
Help to Buy – Equity Loan
The second option under Help to Buy scheme is an equity loan from the government to help make up your required deposit to buy a purpose built home. These are stunning new build properties built specifically for the government scheme.
You will need to make some savings, but only 5% of the overall property value. The government will then lend you 20%. This means that you have a 25% deposit in the bag and will only require a 75% mortgage.
The loan is interest free for the first five years that you own your home. You will then need to start paying interest.
When you sell on your property, you repay 20% of the property value. So if you bought the property for £200,000, the loan would have been £40,000. If you sold it for £210,000, you would repay £42,000. The government receive equity back from the amount they lent to you.
This loan is available to all home buyers, not just first time buyers.
Full details in relation to all help to buy schemes are available from the government website.
Moving Soon in 2018
So, now you have your options, what next? Perhaps, consider what is the right path for you? To do this, take a look at your income and expenditure. Assess what you could afford to borrow and consider this in line with the area you would like to live, the property prices and finally the type of property you would like to live in.
There are also various tools available online to help point you in the right direction. Try the online own your own home questionnaire to see which product best suits you.
Whatever, you decide and whichever path you take to achieve your home ownership dreams, we wish you all the best with your move. 2018 is your year.
Further note
We do recognise that even with the above options, for many, the dream of owning your own home still feels far away. Well fear not! Our next blog will be exploring the alternatives. You may not have heard about this yet, but deposit free renting is a thing. This could be for you. We have help available. Stay tuned. We’re in your corner.
