First time home buyers experience a lot of excitement, confusion and sometimes even disappointment through the buying process. If you’ve been dreaming about buying your own home and live abroad in the UK, this article provides some great tips to give you renewed hope!
The high cost of living and exorbitant deposits demanded by mortgage providers has led many first time buyers to fear that they will never be able to gain a foothold on the housing market. Recognising the problem, the government has introduced the Help to Buy scheme that proposes to help this group of prospective home owners.
The Help to Buy Scheme could help you
If you can prove that you have a regular income and your living expenses aren’t too high you may find that you are eligible for the government scheme. In 2012 HM Treasury published figures that revealed that many house buyers had to find 20% of the house price in order to get a mortgage. The government scheme demands that buyers only have to find 5% of the price. Follow this link for more information on the Help to Buy scheme.
photo credit: Images_of_Money via photopin cc
Calculations are vital
With any major expenditure it’s vital that you assess its affordability. Your proposed house purchase will probably be the most expensive loan that you ever take out, so it’s vital that you add up your income, against any projected expenses. Your age and whether or not you propose to have children will also be taken into account. If you are self employed you’ll have to show that your business has run profitably for three years. The Financial Conduct Authority (FCA), in a bid to curb excessive and reckless lending, abolished self-certification loans in April 2014. The Money Advice Service has a very useful checklist of how mortgage lenders will assess your credit worthiness. The article also suggests how you can improve your credit rating.
First steps towards buying a home
Despite daily horror stories about an over inflated housing market and escalating house prices, it’s still possible for you to afford a house. If you are looking for a new build, up to the value of £600,000, you could apply for a government equity loan. This means that you will only have to find a 5% deposit and the government will lend you 20% towards the price of your new home.
Facts and figures about the equity loan
To date, according to HM government website, 20,000 households have taken advantage of this scheme. The loan is interest free for the first five years, and repayable after 25 years. You will have to pay an annual fee of 1.75% as well as an increase dictated by the Retail Price Index and an additional 1%. If you sell your house in less than 25 years, the government will demand repayment of its 20% share from the sale proceeds.
The government will guarantee your mortgage
If you want to buy an older house, you could apply, through your mortgage provider, to become part of the mortgage guarantee scheme. This is where you’ll only have to find 5% of the purchase price as your deposit and the government will subsidise your lender to the tune of 15% of the house price with the mortgage provider then being able to give you a 95% mortgage. Not all of the High Street banks have signed up to the scheme, so it’s worth shopping around. You will also find that different mortgage providers may charge you fees to take sign up to the scheme.
