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First Time Buyer: What are My Options?


If you’re looking to buy your very first home, the idea of getting a mortgage, and the process of getting one too, might feel a little daunting to you.

There’s no need to be worried though, this is an exciting time and there are many different options available when it comes to getting a mortgage. We’ve gathered some of the most common government schemes options for first-time buyers in our handy guide below.

Lifetime ISAs

If you’re still in the process of saving a deposit for your first home, be sure to look into getting a Lifetime ISA (LISA) which can help you buy a property costing £450,000 or less. You can put up to £4,000 in a LISA each tax year, and the state will then add a 25% bonus on top. The first bonus is paid after 12 months and then monthly thereafter on what you deposit. The current max bonus you are allowed is £33,000 as you can open a LISA at 18 and max it out until the age of 50. You must have had a LISA open for at least a year before you can use it towards your first home and if you’re applying for a mortgage with a partner, you can both open and reap the rewards of one. Even better the money AND bonus saved can be withdrawn by your conveyancing solicitor and used for the buying process.

Shared Ownership Schemes

It might not be for everyone, but if you can’t quite afford a full mortgage on your own or you’re struggling to be approved, it might be worthwhile looking into shared ownership schemes. With this scheme, you won’t be buying the whole property but rather a ‘share’ of it. You can buy a share of property worth between 25% and 75%, and you will pay rent on the remainder. In the future, if you can afford it, you have a right to increase your share of the property.

Help to Buy Equity Loan

These types of loans have become increasingly popular over recent years as they’re a helpful way of getting onto the property ladder. With this loan, you must purchase a new-build property that is £400,000 or below, or £600,000 or below if you’re looking to buy in London. The government will lend you up to 20% of the property’s value which will increase your deposit size, but decrease the amount you need to contribute, therefore provide you with a cheaper mortgage rate.

With this said, you’ll need to contribute a minimum of a 5% deposit on your own to qualify for this and whilst it seems like a great way to own your first property, you must be aware that this isn’t free money and you will eventually need to pay back the money borrowed either through additional payments or during the sale of the property.

Guarantor Mortgages

For many first-time buyers, it’s the bank of mum and dad that are needed for help with a deposit however there are other ways they can help too, like naming them as a guarantor on your mortgage. This means if you fail to pay a mortgage payment, you fall behind or simply cannot afford it then it is down to your chosen guarantor to pay. Naturally, this is a big topic to discuss with your chosen guarantor and a decision that should not be taken lightly as it won’t be you out of pocket, but your loved one instead. It can also sometimes involve them offering their home or savings as security against the loan, so make sure all involved know what they are letting themselves in for.

However it is that you choose to purchase your first property, make sure it is the right decision for everybody involved. We can help provide some expert advice if you’re a first-time buyer but not sure where to start, so get in touch with us today.

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