Putting that very first foot on the property ladder is getting harder and harder for First Time Buyers (FTB's for short). With house prices rocketing, if you are a wannabe FTB, finding the money to buy your own home is nigh on impossible. So what options are there for people looking to buy their first home? One option is to buy with a friend.
A lot of room mates who have rented together now are buying together. It makes sense and by having two incomes instead of one, you may be able to get a mortgage okay. Obviously, you will need to discuss 'what ifs' beforehand. For example, what will happen if one person wants to sell but the other doesn't? So do set the ground rules and ensure that you each have your own solicitor to look over the legal documents.
This means that you are both protected should the friendship go wrong. The lodger mortgage There are now mortgages available which take in to account anticipated extra income from having a lodger. A homeowner can earn up to £4,250 a year tax-free under the Rent-a-Room scheme. This amount may be the difference from not being able to afford to being able to afford a mortgage. Ask the parents! Many FTB's are now getting help from their parents when taking out a mortgage. The most common way is by them providing the deposit.
If this isn't feasible, see if they will buy a share of the house with you, which you can buy back later. Another option is to ask that they act as a guarantor. This means that if you fail to meet your monthly repayments, they are legally bound to make them for you. However, this is a big financial commitment for them that they may not wish to make! Graduate Mortgage You could check whether you qualify for a graduate mortgage. This allows you to borrow more than the standard amount based on your salary with the help of a guarantor. The guarantor could be your parent.
Graduate mortgages differ from standard guarantor mortgages in that the guarantee is only for the part of the mortgage that is over and above the standard amount. With the latter type of mortgage, the guarantee is for the entire mortgage amount. With a graduate mortgage, once you are earning enough money to cover the whole loan, the guarantor is released. This is good option to take if your parents are not in a position to guarantee the whole mortgage, but maybe just part of it. Extend your mortgage Most mortgages run for 25 years. However, if you take a longer one, say over 30 years, it means your monthly repayments will be lower.
This is because they are spread out over a longer period of time. Key Worker Living Programme If you are a 'Key Worker', that is, someone who works in the education, police, health, fire or prison services, you could try the Key Worker Living Programme. £690 million is being provided by the Government for the programme in a bid to help Key Workers afford to live close to where they work. At the moment it is only available in London and the South East. The programme helps in a variety of ways such as subsidised loans or shared ownership depending on the type of programme being offered in your local area. Right To Buy Scheme If you have lived in a local authority property for at least two years, you may be able to buy your property at a discounted price.
More information : http://www.mortgages-uk-mortgage.co.uk http://www.repayment-mortgage-for-uk.co.uk http://www.australianmortgage.co.uk James Miller is a freelance writer specialised in consumer credit, covering topics such as how to deal with bad credit, mortgages and insurance. He aims to help people navigate the financial industry.
