Are you one of those Millennials we have been hearing so much about recently? Everyone is telling us how those born between 1980 and 2001 may never own a property. If being tagged in ‘generation rent’ is not for you, you might want to read this. You can own your own property. There is a way.
Read on and discover how you can be on the path to owning 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.
It’s not you, it’s the market
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 homes being advertised on our platform to give you an idea of what is on offer.
The two main ways of purchasing a ‘social housing’ home 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.
Make a Micro Home
If the above just does not appeal to you, micro homes are the ‘new kid on the block’ in terms of affordable home ownership.
There have been a number of variations in the form of micro homes in the UK. One innovative design is the renovation of a shipping container into a small house. However, most take the form of small cabin like units constructed out of wood and glass. In terms of size, the overall area may be less than 200 square foot.
Being small, a micro home only requires a small plot of land and is relatively cheap to build; particularly in comparison to a normal sized property. Some homes are even built away from site and then lifted into their plot via a crane. Many can be ‘off grid’ meaning that utilities are cheaper.
In this respect, it may be a way of developing cheap housing quickly and in a way that is affordable enough for people to get a foot onto the property ladder.
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.