As house prices continue to rise, getting onto the property ladder feels more like a distant dream for many first-time buyers. But here’s some good news: it’s not as tough as it seems! With a variety of innovative mortgage options and government-backed schemes, securing that first home is more achievable than ever.
If you know someone who’s ready to buy but doesn’t know where to start, sharing these top tips could be the key to turning their homeownership dreams into reality.
No Deposit?
Saving for a deposit may often seem like the biggest hurdle for first-time buyers. However, there are options out there that could provide some assistance – we’re already seeing a zero-deposit mortgage product from Skipton Building Society for example. Their Track Record Mortgage doesn’t require a deposit if the potential first-time-buyer has already been renting consistently for at least 12 months1 – it could be something to let any potential movers know about.
Why They Should Know:
- No Savings Needed: A deposit is no longer a barrier necessarily —this mortgage can let them jump straight in.
- Rental History Counts: Evidence of consistent rent payments can be enough to qualify.
Imagine the relief of moving from renting to owning without the stress of saving thousands for a deposit! This could be the breakthrough they’ve been waiting for.
Flexible Family Support
Many first-time buyers may decide to turn to family for help, but not everyone can afford to hand over a lump sum.
Generation Home understands this and offers flexible mortgage options that can make family support easier. With their Income Booster feature, a parent or even a close friend can add their income to the mortgage application, increasing the amount that can be borrowed. Meanwhile, the Deposit Booster lets loved ones contribute to the deposit as an interest-free loan, equity stake, or gift2.
Why They Should Know:
- Tailored Support: Loved ones can help in a way that suits their finances—no more pressure to give cash upfront.
- Innovative Features: Dynamic Ownership allows shared ownership, with equity stakes that can adjust over time.
By spreading the load, this approach can transform the home-buying process, making it accessible and potentially more affordable for those involved.
A Small Deposit, Big Opportunities
For those who’ve managed to save a little, 95% LTV mortgages may offer a good solution to getting on the property ladder for the first time. Available from several well-known high street lenders, the mortgages require just a 5% deposit, which can get around the challenges of raising a large lump sum ahead of buying a property3.
Why They Should Know:
- Low Deposit Requirement: Only 5% is needed—ideal for those with limited savings.
- Trusted Lenders: Competitive rates from well-established, recognised and reputable lenders.
This could be the stepping stone they need to turn their savings into a solid investment in their future.
Family Assist and Guarantor Mortgages
For families ready to offer more substantial support, Family Assist and Guarantor Mortgages can be an effective means of buying a first home. By using savings as collateral or agreeing to guarantee the mortgage payments, these options allow parents to provide significant help without handing over cash directly. Family Assist typically involves placing savings into a linked account, while guarantor mortgages mean the family member agrees to cover payments if the buyer falls short4.
Why They Should Know:
- Maximise Family Assets: A powerful way to leverage existing wealth to help the next generation.
- Peace of Mind: Provides an extra layer of security for both the buyer and the guarantor.
Imagine the confidence this gives—knowing they have a strong safety net as they step into homeownership.
Government-Backed Schemes
Even though Help to Buy has ended, the government still offers support for first-time buyers through schemes like Shared Ownership5 and the First Homes Scheme6. Shared Ownership allows buyers to purchase a portion of a property (usually between 25% and 75%) and pay rent on the rest, with the option to buy more shares over time. The First Homes Scheme offers new homes at a discount of at least 30%—a huge advantage in today’s market.
Why They Should Know:
- Affordable Entry: Lower initial costs can make it easier to get on the property ladder.
- Growth Potential: Shared Ownership can allow them to increase their stake as their finances improve.
These schemes are designed to make homeownership more accessible—why not take advantage of what’s on offer?
Bespoke Mortgage Advice for Your Loved Ones
If you know anyone looking to take that step onto the property ladder, why not refer them for bespoke mortgage advice, tailored to their exact situation. They may be surprised by the amount of options available, and depending upon their circumstances, could find out that what they once thought was impossible, may be a little further within reach.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
Sources
- Skipton Building Society (2024) Track Record Mortgage. Available at: https://www.skipton.co.uk/mortgages/track-record-mortgage [Accessed 22 Aug 2024]
- Generation Home (2024) Income Booster. Available at: https://www.generationhome.com/income-booster [Accessed 22 Aug 2024]
- Experian (2024) 95% mortgage: can you buy a house with a 5% deposit?. Available at: https://www.experian.co.uk/consumer/mortgages/guides/95-100-percent-mortgages.html [Accessed 22 Aug 2024]
- Moneysupermarket (2024) What is a Guarantor Mortgage? Available at: https://www.moneysupermarket.com/mortgages/guarantor-mortgages/ [Accessed 22 Aug 2024]
- Gov.UK (2024) Shared ownership homes: buying, improving and selling. Available at: https://www.gov.uk/shared-ownership-scheme [Accessed 22 Aug 2024]
- Gov.UK (2024) First Homes scheme: first-time buyer’s guide. Available at: https://www.gov.uk/first-homes-scheme [Accessed 22 Aug 2024]
All the information in this article is correct as of the publish date 29th August 2024. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.
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