How to get your foot on the property ladder?

How to get your foot on the property ladder?

When you need a mortgage, pulling together even a small percentage of the cost of a property (as a deposit) can be very difficult, but, here are some tips that should help.

Of course, Buckingham James may be able to find you a mortgage deal where the lender doesn’t require any deposit at all, even for some First Time Buyers. But, having a 100% mortgage means that you will borrow the full property cost from the Bank or Building Society and such opportunities are viewed as risky and expensive and are hence quite rare. 

Some lenders do offer 100% mortgages which rely of someone like a parent or relative who owns their own home, effectively being named on your mortgage. This means that if you get behind with your repayments, their home could be put at risk, and / or you could end up in a negative equity situation if market forces change – meaning you may find yourself owing more than your house is worth. 

This type of product is commonly known as a ‘Guarantor Mortgage’. 

Other similar products known as ‘Springboard Mortgages’ are available too – but these mean that someone else pays a percentage of the cost of the property as security, with the promise of getting their money back in say 5 years, with interest, providing you keep your repayments up to date. 

But…. because of the associated risks, rather than considering this in the first instance, why not try to gain more independence and satisfaction by considering creative ways to get your own deposit together? 

It may not be as difficult or time consuming as you think!  Clearly, being able to save up for a deposit is ideal, but it is likely you will need a sum of between 5 and 10% of the cost of the property (in 95% and 90% Loan to Value type mortgages).  This can obviously be a challenge.  However…. consider the following tip suggestions….

1. Could you save money by cutting the cost of your rent? This may be possible if, for example, you moved in with friends who have spare bedrooms.  Alternatively you may find something cheaper by looking for opportunities on flat-share websites.
2. By moving, could you save money on transport costs? – Being near to your place of work – or even seeing whether working from home is a possibility can both save enormous amounts of money.
3. Could you negotiate a reduction on your current (or future) rent deal? Owners may be more flexible than you think, as for them; it may be more economic to accept a reduced rent amount from you, rather than risk you moving on and them being left with a property bringing in no rent at all!  A deal may be available whatever – but particularly if you are able to argue that your accommodation is smaller than others in say, a shared house.
4. Could you negotiate a lower rate if you commit to staying in situ for an agreed period – e.g. a year?
5. Could you consider co-living? This is where you rent your own bedroom, so that you so have some private space, but where you share bathroom / kitchen / other facilities with others.
6. Renting accommodation with ‘bills included’ can also help you to manage your outgoings as you are less subject to, for example, seasonal fluctuations in heating costs.
7. Could you (if you are not already there!) perhaps move in with your parents or another family member during the period when you are saving up?
8. Are you able to reduce any ongoing costs? g. TV package rental, cost of socialising, monthly subscriptions, utilities, by driving a more economical car – or managing without a car at all for a while.  Could you shop for groceries more cheaply?  Perhaps create a spreadsheet of your incomings and outgoings so that you always have a full understanding of where your money is going.  You might be surprised!
9. Could you consider ‘shared ownership’ properties?
10. Could you get Government help? Various sponsored schemes are often available.

CONSULT AN EXPERT.  Buckingham James will always give you pointers and keep you moving in the right direction and there is no reason at all not to chat even if you are not yet ready to buy. 

Remember – all of these options, while perhaps less than perfect, will be short lived and should be looked upon as merely a ‘means to and end’ – owning your own home.  It is very important to keep this goal in clear sight at all times.  Always stay positive.  You will get there.