Last Updated on 11.7.16 by Gorvins
The property market is slowly improving in the UK, despite this; the dilemma for first time buyers still isn’t over. The government has promised to make available some 200,000 homes to first time buyers in England by 2020. Whether these homes will have the ‘affordable’ prices to match is another question; however, there is help available.
Schemes and which one is right for you…
The number of mortgage products available to first time buyers in the UK has doubled in the last three years, showing something is on the move. According to the online comparison site, MoneySuperMarket.com, the number of 95% mortgages available has increased by 448% – there are 170 mortgage deals presently on the market available to buyers with just 5%. In comparison, in 2012 there were only 31 products available. The Help to Buy scheme has certainly played its part. Previously, a property costing £150,000 would require a deposit of £31,500 under the average loan to value ratio. However, under the 5% deposit scheme, the same property would only require a £7,500 deposit. This scheme is basically a 95% mortgage.
Another option under the Help to Buy scheme is being run by new homes builders. Under this part of the scheme, the developer agrees that you buy their home with a 5% deposit. The government then pays the home builder a further 20% of the rest of the value (they waive the fees the developer has to pay to the local authorities) and you get a mortgage on the remaining 75%. The 20% from the government of course isn’t free, however, in effect it is an interest free loan for the first five years. The scheme is popular because you are only borrowing 75%, which means you are likely to be able to access better mortgage rates.
The government have also introduced a new initiative during the lead up to the general election: the Help to Buy ISA. Here the Conservatives have promised to pitch in £50 for every £200 you save towards a house, up to a maximum bonus value of £3000. The scheme will be available from autumn 2015 through banks and building societies to those aged 16 and over. Even better news for couples is that both individuals can apply as it is limited to one per person and not one per household, so as a pair you could earn up to £6,000 in bonuses.
Gorvins view and how we can help
The property market is hopefully heading in the right direction and the government schemes are there to encourage first time buyers and homeownership. It is something that certainly needs to be done as home ownership is at its lowest level for three decades. Furthermore, with Nationwide reporting another rise in house prices as of 3rd June 2015, the struggle for some to get onto the property ladder is becoming more and more difficult.
The shortage of available and affordable homes is still a problem; housebuilding is at its lowest level since the 1920s. 200,000 more homes by 2020 will help, but that is only 40,000 a year. A number double the size of this would be more beneficial for everyone in the market, including those who want to upsize.
Gorvins understand the difficulties and costs for first time buyers and we want to help you save money. For this reason we have introduced an exclusive offer of 25% off all legal fees for first time buyers. We offer a personalised, no hidden fees and extremely straight forward process to help keep this exceptional life event as stress-free as possible.
For more information please see our dedicated page gorvins.com/first-time-buyer for the unique code, or give us a call on 0161 930 5117.