GETTING onto the property ladder has become harder than ever as house prices soar.
The average cost of a home currently stands at £292,118 – up 15.5% since this time last year.
Nick Mendes has offered his top tips for getting onto the housing ladder
The Bank of England hiked the base rate to 2.25% last week – its seventh consecutive interest rate rise since December – and could rise further still.
It means mortgage rates are on the rise compared to this time last years, adding to the cost of buying a home.
But there is extra help on offer to get on the property ladder.
SE spoke to Nick Mendes, technical manager at John Charcol mortgage advisers, who revealed four government schemes you can utilise to help you make your way in the housing market.
Mortgage Guarantee Scheme
It’s also known as the 5% deposit mortgages government scheme and was introduced in the 2021 budget.
Under it, the government backs lenders to offer more mortgages that require a small deposit.
The scheme is only available for properties up to a maximum purchase price of £600,000.
But first time buyers, as well as existing homeowners, can use it to secure a mortgage with a loan-to-value of 95%.
But you’ll have to be quick if you want to get a house through the scheme, as the deadline is December 31.
Nick said: “The scheme is a great option for first time buyers who are struggling to save for a large deposit.”
Not all lenders offer these 5% deposit mortgages, so you’ll need to check with each lender or speak to a mortgage broker, which may cost a fee.
And you’ll still need to fulfill the lenders other criteria for getting a mortgage, like being able to afford the monthly repayments.
You can find out more about the scheme from the gov.uk.
Help to Build
The Help to Build scheme offers an equity loan is to help you build a home or convert a previously commercial building.
Through the scheme, the government offers you a loan based on the estimated costs to buy a plot of land and build a home or buy a building to convert into a home.
The loan can be between 5% and 20% of the total estimated costs of the project, or up to 40% in London.
You can spend up to £400,000 on building your home and up to £600,000 if it include buying the land too.
Typically, people need at least a 5% deposit to qualify for the scheme.
Nick said: “The Help to Build scheme is a great option for those that want to have a go at building their home from scratch rather than the costly process of purchasing a home and then funding renovations.”
However, he added one down side is the number of lenders you can approach are “limited and often restrictive”, meaning you’ll have to go through a broker, who will charge you a fee.”
You can check out the full details of the Help to Build scheme on gov.uk, and of course you’ll have to be able to fulfill the rest of the eligibility for the scheme.
Right to Buy
This scheme is aimed at council house or housing association tenants in England or Northern Ireland and allows them to buy their home at a discount.
The discount is worth £87,200 or £116,200 in London.
You can only apply to buy your home under certain criteria though.
It has to be your only or main home, it must be self-contained, you need to be a “secure tenant” and you must have had a public sector landlord for three years.
A secure tenant is someone who has lifetime tenancy over a property.
Nick said: “The scheme offers tenants the possibility of ascending the first rungs of the property ladder and owning an asset that is an investment for the future.”
One thing to bear in mind though is that you have to stay in your property for a minimum of five years after buying it.
Check out if you’re eligible and how to apply from gov.uk.
The First Homes scheme
The First Homes scheme was launched last year and means prospective first time buyers in England can get homes at a 30% to 50% discounted rate compared to market price.
But, if the homeowner decides to sell the property down the line, the discount on the new value will be made available to any future buyer too.
As well as being a first time buyer, you also have to be 18 or older, and able to get a mortgage for at least half the price of the home.
You also must be buying the home as part of a household with a total income of no more than £80,000, or £90,000 in London.
Nick said: “The scheme is open to buyers from all professions, but local councils are given the power to prioritise discounted homes for essential workers, people who live in the area and those on lower incomes.”
But this scheme is limited to certain areas with 1,5000 of these homes being rolled out in 100 locations over the next two years.
More are expected to become available as housebuilders and local authorities add the scheme into their plans to build new homes.
You can find out more about the First Home Scheme from gov.uk, including how to apply.
Meanwhile first-time buyers have been giving a helping hand after the government slashed Stamp Duty.
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