Saturday, March 2, 2024

How First-Time Buyers Can Step On To The Property Ladder

Buying a home is a dream for many people, but purchasing your first house is often a daunting prospect. If you are a first-time buyer looking for guidance when stepping on the property ladder, this guide will help you.

What are the benefits of buying your first property?

Some of the key benefits of buying your first property include:

  • You are purchasing an asset and with each monthly mortgage payment strengthening your financial position.
  • You have greater home security, whereas tenants are often held at the whims of their landlord.
  • You have freedom to style your home in any manner you see fit.
  • You have greater control over your costs.

As a first-time buyer, you have some advantages in the housing market over existing homeowners. You don’t have a property you need to sell; you are not involved with a property chain. This is likely to make your offer a more appealing one to some vendors.

You will also find a range of schemes available to first-time buyers to assist you in stepping onto the property ladder.

Is it worth stepping onto the property ladder?

There are some negative aspects of owning property. You are making a significant financial commitment, you are responsible for repairs, and depending on the type of mortgage you hold, you might find the costs of homeownership rise.

However, it is down to each person, family or household to determine if it is worth stepping onto the property ladder. For many people, the advantages of homeownership, and the comfort and confidence that comes with paying towards an asset, makes owning a property a big goal in life.

When looking to explore your mortgage options you should contact mortgage brokers, like The Money Hub for example, to get advice.

The Help To Buy scheme is there to help first-time buyers

With the Help to Buy Equity Loan scheme, first-time buyers in England pay a minimum of 5% deposit for the property price and arrange a repayment mortgage of at least 75% of the house price. It is then possible to borrow an equity loan between 5% and 20%, while buyers in London can borrow up to 40%.

This scheme is for new-build homes only, and it must be the leading home the buyer lives in. There is a “maximum property price” limit across the country, so check your local area to see your applicable limit. In the North East of England, the maximum property price is £186,100, while in the capital, it is £600,000.

Shared ownership scheme for first-time buyers

With shared ownership, first-time buyers can purchase a share of a property, usually between 25% and 75%. The buyer takes out a mortgage on the property share they own and pay rent on the rest of the home. With the mortgage accounting only for the owned part of the property, buyers benefit from paying a smaller deposit.

It is possible to increase ownership over time, so for some first-time buyers, shared ownership is a suitable scheme in moving towards fully owning their house.

Guarantor mortgages offer much needed support for first-time buyers

It is also possible to buy a first home with help from family members, friends or loved ones. Any first-time buyer who is in the fortunate position of receiving support from people they know should consider a guarantor mortgage.

For a first-time buyer who has been struggling to find an affordable mortgage, a guarantor mortgage can make all the difference in stepping onto the property ladder. However, a failure to pay the mortgage payment each month may result in the guarantor being required to cover the payments.

With a guarantor mortgage the guarantor must be a UK resident and have enough income to cover the mortgage payment plus any existing financial commitments they have. The lender will carry out a full detailed income & expenditure review to ensure all affordability requirements are satisfied.

The Barclays Springboard scheme is a suitable option

The Barclays Springboard scheme offers many benefits for the first-time buyer. Your family or friends open an account and deposit 10% of the purchase price as security for the mortgage allowing the buyers to get a larger mortgage.

For the people assisting the buyer, they take comfort in knowing they are assisting a loved one to buy a property, and they are able to receive their money back with interest in the future.

Sam Allcock
Sam Allcock
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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