Top Tips To Get On The Property Ladder

Few months ago I told you about the news that first time buyers need a deposit of around £31,500 to secure their first home. This figure just seems so out of reach, but don’t worry though, it’s not all doom and gloom as there are some options for those of us that are struggling to build a deposit and are unable to secure enough mortgage funding.

“Guarantor” Mortgages

One of the most common ways that people are able to get their first home is through help from their parents. If your parents are unable to lend you the money towards a deposit, they still might be able to help you get that leg up onto the property ladder.

I’m sure you’re wondering right now how they can help and overall it’s quite a simple concept. Some banks are now offering something called “guarantor” mortgages and this is where your parents underwrite the loan on your new home. This means that if you fall behind with your monthly payments, you parents have to stump up the cash to cover them.

The advantage of these schemes is that you are able to borrow more, and no one has to stump up the cash up in advance. This is very risky though for your parents, because if you run into any financial problems, it could potentially put your parents’ home at risk and affect their ability to get credit, which is not a nice thing to hang over your head. For this to work, your parents would need to have sufficient income or equity in their home to qualify to be a guarantor, so this might not be an option for all first time buyers.

Joint Buying

Another option to help you be able to afford that place that you want, is buying with your partner or with friends, as all incomes will be assessed. Generally, banks will lend up to three times a single income and two and a half times a joint income, meaning that there is a bigger chance of you succeeding in getting a mortgage.

Do make sure though to eliminate any tricky situations, by making sure that you have all legal bases covered in case it all goes pear shaped and you go your separate ways. Sorting out technicalities could be difficult if you end on bad terms.

Part Rent – Part Buy

Also to consider, is  investing in a shared ownership scheme. If your parents can’t help, and you have no way of getting your hands on the money for a deposit, then you could benefit from a “shared ownership” purchase.

How this works is by some housing associations allowing you to buy 25% of a property, and then pay rent on the rest. Then, when you can afford it, you make a further purchase. This is handy because as you are only buying a small amount of the property, the deposit that you need will be significantly smaller, closer to around 5%.

Hopefully, one of these options could be a potential help to you when looking to get your first property, so happy house hunting and good luck!

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