WORDS: CLARE VOOGHT
If you’ve fallen head-over-heels in love with London and never want to leave, then maybe it’s time to stop renting and secure your own place.
It might seem like buying a home is harder than getting tickets for the Olympics, but there are a few nifty ways to get onto the housing ladder.
Shared ownership
“Shared ownership is funded by the government, for people who can’t afford to buy outright,” explains Richard Geary, sales manager at Notting Hill Housing, which offers shared ownership schemes in areas like Brixton, Southwark and Hackney.
“The person buys a share, usually between 25-75 per cent. The part they don’t own, they rent. The rent is subsidised so would be lower than the rate they’d pay for a mortgage.”
The requirements are that you must be a first-time buyer and not earn more than £60,000. Eventually, people either buy the housing scheme out or use it as a stepping stone to full ownership elsewhere.
Deposits vary between the housing providers, but they usually start at five or ten per cent of the share you’re buying, so they can be as low as £4000. This means people with incomes from as little as £17,000 can get themselves onto the housing ladder.
As with all mortgages, the deposit you put down affects what you pay back, so it’s still better to smack down as much as you can
Council worker Jarno Stet, 30, bought a 25 per cent share in a two-bedroom apartment in Canada Water through Affinity Sutton for £121,000.
Stet says: “I’ve been renting a property in Canada Water with friends for eight years and the monthly rental for my room, without bills, is £1,000. The total monthly outgoings for my new home will be less.”
Avoid stamp duty
Until 2010, stamp duty sapped a lot of extra cash from homebuyers. But right now, thanks to the “stamp duty holiday” set in place to help people buy homes, first time buyers are exempt from the taxes. This ends on March 24 2012, so get in quick if you can.
Visit direct.gov.uk for more.
Fee-free mortgages
Samantha Baden, property analyst at findaproperty.co.uk says: “While it’s true that the stamp duty holiday for first-time buyers ends in March, getting on the ladder could still become more affordable in 2012, due to government lending initiatives and an increase in the number of fee free mortgages for first-time buyers.”
Banks that offer mortgages with no extra fees include Halifax, which pledges to save you up to £1000 in booking and completion fees. ING Direct, Nationwide and HSBC also offer fee-free mortgages. Watch out for higher rates and hidden charges when picking one.
FirstBuy
To cut down costs on buying a home, FirstBuy is a good way to combat sky-high property prices, and covers newly built homes.
The government scheme lets you own an entire property but only pay for 80 per cent. It’s available to first-time buyers earning less than £60,000 a year and only requires a five per cent deposit.
The extra 20 per cent will be covered by an equity loan from the government and the company that built the home, which they get back when you sell up. Companies like Berkeley and Barratt London offer FirstBuy schemes on properties across the city.
Mates mortgages
You’ve lived with your best buds, so why not go all the way and buy a house with them? If you’re sure you won’t bicker over repayments, then there are options that allow a number of friends to buy a home together – and sharing a deposit makes it much
more manageable.
Britannia’s Share to Buy mortgage lets up to four people club together, taking everyone’s incomes into account. You can be friends, family members, married or unmarried couples, as long as you all live in the property, and the minimum deposit is
10 per cent. It’s also fee-free.
100 per cent mortgages
Last year, Aldermore bank relaunched the a 100 per cent mortgage, allowing people to buy houses without putting down a cash deposit.
Buyers need to prove they can pay back the entire amount borrowed and they also need a relative to act as a guarantor. This might work for some people, especially as you won’t be throwing away money in rent, but it does cost more in the long term.
UP YOUR CHANCES
• You’re up to speed on how to get a slice of the property pie, now make sure the bank says yes. Schemes are open to people not born in the UK – as long as they can prove they’ll sustain home ownership in the long run.
• Pay off any debts you have, then mortgage lenders will see you as a low-risk borrower.
• Save your pennies – the bigger the deposit you put down, the cheaper your mortgage will be.
• Get your records in order – if your bank statements and pay slips are all in order, you’ll appeal much more to a mortgage lender.
• Get on the electoral role – this helps confirm your identity and address history and it may improve your credit score.
• Don’t just apply to everyone. Lenders can see when you’ve applied for a mortgage before
and can wonder why you keep being refused.
• Be realistic with your budgeting – it’s tempting to stretch to a fancier area, but this could leave you stuck for cash in the long run.
• Having indefinite leave to remain in the UK is a big help – without this it’s harder to prove that you can sustain long-term ownership – but it won’t always be a deciding factor.
• Apply before you change jobs – if you have been at your job for less than a year, your chances of getting bank backing could drop.
• If you’re thinking of applying for a 0 per cent balance transfer credit card, wait until you’ve got your mortgage. They can impact on your credit score.
