Options for First Time Buyers


The current economic climate and particularly the state of the housing market mean that it is now seemingly impossible for young people to get onto the property ladder without significant financial backing. It is not so much that they could not afford to pay the mortgage repayments, but that they cannot afford to pay a (often minimum) 15% deposit. On a £130,000 house, that is £16,000 - not an amount that many first time buyers can afford to pay, particularly those that are single.

As a mid twenties singleton who still lives with mummy and daddy I know how difficult it is to save anywhere near the amount required for a deposit on a modest property. I've been saving now for a few months, and I'll probably be saving for a few dozen more at this rate! Had I known a few years ago how hard it would be to get a mortgage; I definitely would have started saving earlier.

There are thankfully some options for people in my position. You can now find schemes that offer shared ownership of a property - meaning that you will only own a percentage of the property (normally somewhere between 25% and 75%). The obvious benefit of this is that you will only pay a fraction of the deposit that you would normally be required to pay. On the down side, you will miss out on some of the equity growth should the house market rise, and obviously you will not own the whole of the property.

Through the government New Build HomeBuy scheme you can buy a share of a property, and pay rent on the remaining amount. You may then buy the remaining shares of the property at a later date - known as 'staircasing'. An alternative option provided by HomeBuy is the offer of an equity loan up to 30% of the market value of a property.

There are various other first time buyers' mortgage options available, whilst another option is to privately acquire a loan in order to pay for a full mortgage deposit yourself. It is important to be cautious if deciding upon this option - seek out a reputable lender and make sure that you fully understand the terms and conditions before signing anything.

If you do end up in financial difficulty speak to a professional money management company (often referred to as debt management companies). There are a number of these around and you should research them to see who has the best reputation.

Circle Loans are a reputable loan company in the UK, you can view their site here: http://www.circleloans.co.uk/

Zebra Money Management are a debt management company with a vast degree of experience and you can view their site here: http://www.zebramoneymanagement.co.uk/
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