To get you started on your climb up the property ladder, we’ve decided to take a look at some of your best options as a first-time buyer.
Where should you start?
Save. It’s a simple first step, but it’s the one that the majority of buyers struggle with the most. Putting a little away here and there simply won’t cut it, you need to be consistently squirrelling away money, sacrificing holidays and big money spends, in an attempt to scrape your deposit together.
Fortunately, there is help out there. Do some research and find a savings account with the best interest rate. The most popular savings account for first-time buyers at the moment is the Help to Buy Isa.
This account allows you to make monthly deposits of up to £200 until you either buy your first home or reach the £12,000 limit. Once you actually purchase a home, you can put the savings from your Help to Buy ISA towards the deposit, and after the sale is complete you will receive a 25% bonus from the government. For example, if you had £12,000 saved, you would receive a £3,000 bonus after completion.
What are your options?
If you already have some money saved up, but you're just short of the mark, it may be worth considering the following options.
Rent to Buy: Rent to Buy allows you to choose a home that you will one day buy, but in the meantime, you’ll only have to pay a reduced amount of rent (80%), meaning you can save the other 20% for a deposit. Once you enter this scheme, it lasts for five years. During that time, you can buy the property outright, or you can pay for a 25% or 75% share of the property.
0% mortgage: A 0% mortgage is similar to a 5% mortgage, in that a guarantor must put forward 10% of the deposit, whilst you put down nothing. The guarantor will receive the cash back, provided that you keep up with your mortgage repayments.
Bank of mum and dad: When all else fails, what better place to go than the good old reliable bank of mum and dad. Many of the options above require your parents to act as a guarantor anyway, so why not just go straight to the primary source?
Whilst it might seem daunting to begin saving for a property, there are many options that can help you take your first tentative steps onto the property ladder. Do some research and find out which options suit you best.
