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12 Ways To Afford A Home

Personal

Author: Sionainne O’Keefe

Reasons to choose Wilson Browne

In our own take of the 12 days of Christmas we give you 12 tips to getting onto the property ladder…..

  1. Save

As simple as it sounds, the first step to affording a home is to make sure you save as much as you can, keep a close eye on your outgoings and look at where you can make savings.

Ideally you should aim to save up to 10% of the proposed purchase price of your home, although sometimes 5% will be enough.

  1. Mortgages

As its likely you will need a mortgage to purchase your home, at an early stage work out how much you can afford to borrow, what you can afford to pay back each month comfortably and research the type of mortgage that will be most suitable for you, for example a fixed rate or variable rate mortgage.  You should at this stage consider the likely purchase price of your home and be realistic! Mortgage brokers can assist you with finding the right deal for you but you can do also do your own research fairly easily online with the help of tools such as online calculators.

  1. Credit Rating

It is important you protect your credit rating, there are various websites that enable you to check this.  Having a good credit rating can provide you with a wider range of available finance options to purchase your home.

  1. Consider the Help to Buy Scheme

A Government assisted scheme which allows you to purchase a new build property with a low 5% deposit.  This makes saving easier, getting you into your dream home faster.

The Government will then lend you up to 20% of the value of your new build by way of an equity loan which will be secured against the property by way of a legal charge. The equity loan is interest free for the first five years.

  1. Help to Buy/Lifetime ISA

Subject to eligibility criteria, you can save to purchase a home through a Help to Buy or Lifetime ISA. When you are ready to purchase your home, the Government will top up your savings by way of a bonus.  Read more about this here https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/  and here https://www.gov.uk/lifetime-isa.

  1. First time buyer stamp duty relief

If you have never owned a property before, and are eager to own your first home, subject to satisfying various criteria, you will not have to pay any Stamp Duty Land Tax on completion of your purchase. This can be a huge saving and makes buying a home for the first time that bit more affordable. Every little helps! Read more about this here https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note.

  1. Purchase price of less than £125,000

If the purchase price is less than £125,000 and you own no other property on completion of your purchase, then you will pay no Stamp Duty Land Tax on this. Small savings like this can be important to consider when you are weighing up the affordability of buying a home.

  1. Gifted deposits

A gifted deposit is where part, or all, of your deposit is provided by way of a gift from someone else which may be a family member, friend  or  partner. This can be a huge help in affording a home as this is money towards a deposit you are not subject to paying back. A higher deposit may also mean access to cheaper mortgage rates.  You should note that where monies are coming from third parties additional checks will need to be undertaken by your Conveyancer and it must be disclosed to your mortgage lender.

  1. Loans from family or friends

Maybe a friend or family member wishes to provide you with assistance with the purchase of your property but does not wish for this to be an outright gift. They may consider making a loan to you or perhaps retaining an interest in the property by way of joint ownership or a trust. Again additional checks will need to be undertaken depending on the arrangement and any tax implications also need to be considered.  It is important to notify your Conveyancer at the outset of any proposed arrangements.

  1. Shared ownership

Shared Ownership allows you to purchase a share of the property (for example 50%). You will pay rent on the share you do not own to a Housing Association.  You can usually purchase further shares in the property by way of “staircasing”, eventually enabling you to own the property outright (subject to any restrictions imposed by the Housing Association).  This can be a good first step onto the property ladder. You should ensure however that you are able to afford the rental payments alongside any mortgage payments.

  1. Right to Buy

If you currently rent your council house, and want to move on towards buying a house, you can purchase your council house through a Right to Buy usually at a discounted rate.

  1. Joint ownership

Buying a house with another person means double the contribution towards the deposit, double the income in calculating a mortgage, double the contribution towards mortgage repayments and more. This means hopefully getting on the property ladder can be quicker and more affordable.  You may wish to purchase with a partner, family member or friend.

If you need any Residential Conveyancing advice, please contact our Specialist Team