Stepping Onto the Property Ladder: Exploring Government Schemes for First-Time Buyers
First Time Buyers face excitement and challenges when navigating the property market. Saving for a deposit, understanding mortgage options, and dealing with legalities can feel overwhelming. Thankfully, several government schemes exist to help you take that crucial first step onto the property ladder. Let's delve into three popular options:
1. Shared Ownership:
This scheme allows you to purchase a share of a property, typically between 25% and 75%. You pay a mortgage on your share and rent on the remaining portion to a housing association or developer. This option requires a lower deposit compared to a full purchase, making it easier to get started. However, remember that you'll also be responsible for your share of maintenance costs and rent. It's crucial to understand the long-term implications before committing to shared ownership.
2. Mortgage Guarantee Scheme:
Launched in 2021, this scheme helps FTBs access mortgages with a deposit as low as 5%. The government provides lenders a guarantee, encouraging them to offer these low-deposit mortgages, which were previously scarce. While this scheme makes homeownership more accessible, it's essential to be aware of the potential downsides. Lower deposits often translate to higher interest rates, increasing your overall borrowing costs. Additionally, with a smaller deposit, you'll have less equity in the property, making it more difficult to move up the property ladder in the future.
3. Joint Borrower Sole Proprietor Mortgages (JBSP):
This option is specifically designed for sole traders who face difficulties securing mortgages due to the self-employed nature of their income. It allows you to join a family member, such as a parent or sibling, on your mortgage application. This combined income can strengthen your application and improve your chances of securing a mortgage. However, proceed with caution. JBSPs are legally binding agreements, so it's crucial to have open communication and a clear understanding of financial responsibilities with the joint borrower. It's also recommended to seek legal and financial advice before proceeding.
Choosing the Right Scheme:
Each scheme caters to different needs and circumstances. Choosing the right one depends on your individual financial situation, risk appetite, and long-term goals. Here are some additional factors to consider:
Deposit size: Consider your current savings and how much you can realistically save in the near future.
Income stability: Ensure your income is consistent and sufficient to manage mortgage repayments.
Long-term plans: Consider if you plan to stay in the property for a long time or envision moving up the property ladder soon.
With careful planning, thorough research, and professional guidance, government schemes can significantly empower you as a first-time buyer, helping you take that initial step towards owning your own home.
It is always important to instruct your own survey to provide you with extra piece of mind about the condition of the property, identifying any repairs which could cost you.
Valunation can carry out a survey on your property, please contact us on 01206 363658 or referrals@valunation.com