Nowadays, especially in many parts of the South East of England, first time buyers might consider buying a home of their own to be out of reach. This is not necessarily the case.
With homes still rising in value, buying a home in the post 2008 credit-crunch environment will therefore require a larger deposit than pre-credit crunch, but there is help at hand for the first time or new home buyer. In particular, there is a Government-funded initiative aimed at providing buyers with a large part of the deposit demanded by mortgage lenders.
Most lenders will require a minimum deposit equating to 5% of the purchase price. Looking to buy a home for say £220,000. However, borrowing costs are increased when you borrow more than 75% of a property’s value and additional costs are likely to be incurred, such as Mortgage Indemnity Guarantee (MIG) premiums, etc.
Using the example above, at 5% deposit, it’s likely you’ll need to find a minimum deposit of £11,000 plus MIG premium. The mortgage interest is also likely to be more expensive. In order to reduce mortgage costs, you might consider taking advantage of a Government-funded initiative aimed at buyers of new-build homes..
The Government scheme is called the Help to Buy Equity Loan and is available in England on homes up to £600,000 in value. The scheme is open to anyone currently not a homeowner, so it’s not restricted to first-time buyers. However, remember that this is an equity loan and as such, the government effectively owns a small share of your home which you must pay back when you sell.