First time buyer? Here’s 8 mortgages, schemes and options to consider

First time buyer? Here’s 8 mortgages, schemes and options to consider

We know buying a home might seem out of the question right now. But there’s a range of schemes, mortgages and options available to those trying to get onto the ladder — so it’s not all doom and gloom.

“For years, the government and mortgages lenders have been rolling out new schemes and products to help first time buyers onto the ladder,” award-winning mortgage adviser Jo Jingree explains.

“And in 2023, this shows no signs of slowing down,” Jo says. “Some options, like the First Homes scheme or Shared Ownership scheme, might not have been around for our parents. But that’s because they weren’t needed. With energy bills, interest rates and inflation, it’s harder for this generation to buy…but it’s not impossible!”.

To help, we’ve compiled a list of options first time buyers might want to explore:

 

1. 100% mortgages

As of 2023, 100% mortgages are back for first time buyers all thanks to Skipton Building Society. The revolutionary product is the first of its kind and it’s specifically designed for renters who have been unable to save a deposit while renting.

So how does it work? The new Track Record mortgage looks into a renter’s history of making rental payments and if they meet the lender’s affordability criteria, they are able to access a mortgage without a deposit.

“Of course, this won’t suit everybody,” Jo says. “But it could be a solution for those trying to find a way out of renting and onto the first rung of the ladder. If this sounds like you, reach out and let’s talk through your options,” Jo adds.

 

2. Family Springboard Mortgage

How does a 0% deposit sound? Generally speaking, when you buy a home you’ll need to put a deposit down. However, with some Family Springboard Mortgages this isn’t always the case.

A lender like Barclays allow you to borrow 100% of the property purchase if a very generous family member puts 10% of the property price into a ‘Helpful Start’ savings account.

If you make all your mortgage repayments on time, the family member gets their savings back after five years — and with interest. Think of it like a springboard onto the property market.

 

3. Concessionary Purchase

No deposit? No problem. Some lenders might let you make a concessionary purchase. This means you’ll have the option to put down equity instead of cash.

This might work if you wish to buy the property you’re renting, and the landlord doesn’t want to sell it on the open market due to cost or time constraints. Instead, they sell it to you at a discounted rate. Or your parents are selling their home and they want to give you a discounted price.

Either way, the homeowner will need to gift the equity to you in the form of the difference between the market value and the discounted purchase price. You’ll then use equity in the property for all or part of your deposit.

 

4. A Joint Mortgage

You’re probably already aware that you can get a mortgage with two people. But did you know that some lenders will allow up to four people to buy together?

Be it your friends, family or business associates, some lenders allow up to four people to be named. This can make things more affordable, as it can mean you are saving for a deposit together and making monthly payments together, too.

However, just note that most lenders will only consider the income of the two highest earners to calculate your affordability. Although there are a handful of lenders who will consider all four.

 

5. A Joint Borrower Sole Proprietor Mortgage

This differs to a joint mortgage.

A joint borrower sole proprietor mortgage is where the home buyer can add either a family member or friend’s income onto their mortgage application to increase their affordability. But only the home buyer will be the legal owner of the property.

 

6. The Bank of Mum and Dad

We’ve spoken before about the Bank of Mum and Dad. In the property world, this phrase refers to when parents are keen to explore the possibility of releasing some of their own equity to help their children buy a place. And according to Institute for Fiscal Studies (IFS), this generous bank is booming.

The IFS found that the Bank of Mum and Dad gave almost £14 billion a year between 2018 and 2020 to help children with milestone events, like buying a house. While the Mortgage Advice Bureau claims that the Bank of Mum and Dad is the 9th biggest lender, with 84% of parents helping their children get onto the property ladder.

 

7. Shared Ownership

You don’t have to own 100% of your home to get on the property ladder.

Through the Government’s Shared Ownership scheme, if you’re unable to afford all of the deposit and mortgage payments, you can buy a share of the property (between 10 and 75% of the home’s full market value), and pay rent to a landlord on the rest. This could make your monthly payments more affordable.

And it’s not just new-build homes which this scheme covers. You can also buy an existing home through a shared ownership resale scheme or if you have a long-term disability, a home that meets your specific needs — like a ground floor flat.

 

8. First Homes scheme

Heard of the Government’s First Homes scheme? Launched in June 2021 and available in England, the aim is to help first time buyers get a foot on the ladder by offering a new home for 30% to 50% less than its market value.

However, this scheme comes with a few caveats. For example:

  • The home must be a new build, built by a developer
  • You must be 18 or over
  • A first time buyer
  • Buying the home as part of a household where the total income is no more than £80,000 or £90,000 if you live in the capital

Some local councils may also set some eligibility conditions, like prioritising First Homes discounts to people who already live in the area or are essential workers.

 

So, as you can see — there are options

At Mortgage Confidence, we offer a free 30-minute consultation to help with these sorts of enquiries and more to make sense of it all. So, no matter whether you’re currently renting but are looking to buy, or you’ve not left home yet, we can explore your options. Get in touch with mortgage adviser Jo to get the ball rolling.

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