Planning to buy a house is both daunting and exciting at the same time. Daunting because it can be an uphill task saving enough money for the initial deposit; and exciting because if you can raise the deposit, you will finally get rid of the landlord.
To qualify for a mortgage, you will be required to have between 10 to 20 percent of the value of the house, and this can be a really huge sum depending on the location. The good news is that you can easily find help as long as you know where to look. The following is a short guide that will show you how to save the deposit you need to get on the property ladder.
Consider reducing your rental costs
Paying less rent is a great way to increase the amount of money you commit towards your deposit fund. There are several ways you can reduce your rental commitments such as opting for a cheaper accommodation. If getting a cheaper accommodation is not an option, you can find out of your tenancy agreement will allow you take in a lodger. Another viable option is to opt for a council house. These are accommodation option for people who earn a low income. And if none of that works, you can always move home and live with your parents. While all of the scenarios mentioned here may involve a degree of short-term inconvenience, it will help reduce how much you pay the landlord.
Get help with your deposit
“More and more people are getting outside assistance with their initial deposit” suggest Housing Experts The House Shop. With a little financial help, the dream of owning your own home will become more realistic. There are several ways this can happen. The first is to ask for help from home. Parents, siblings and even friends may be willing to help with cash gifts, loans or even agree to a more formal arrangement with a mortgage lender where they serve as guarantor or provide part of the deposit. This can tremendously help relieve the burden of trying to save and raise enough deposit on your own.
Additionally, there is the Help to Buy Scheme offered to first-time buyers by the government. As long as you are 18 years and older and can raise up to 5% of the initial deposit, you can apply for an equity loan that would help you make up the balance.
Intermediate Rent
If you cannot save for your deposit you may want to have a look at intermediate rent properties offered by housing associations. Intermediate rent scheme allows getting a rental property at subsidised rent usually up to 20% off the local market rent.
This scheme is perfect for people who are looking to save money on deposit and purchase property at a later stage. What is good about intermediate rent scheme is that housing associations provide an option to buy them.
Erikas Grig said, “it is a perfect scheme for key workers and those on low income to save and buy the property who would otherwise be priced out if not for IMR scheme”.
Shared ownership
According to Mortgage advisers, Mortgage Saving Experts, share ownership may be an affordable alternative for people struggling to raise the necessary deposit needed to buy a property.
This involves purchasing part of the property and renting out the rest. This way, the size of deposit and mortgage you need is tremendously reduced. And even though you don’t exactly own a hundred percent of the equity, you will at least have a foot in the property ladder.
Of course, even with shared ownership, you will still need a deposit before you can qualify for a mortgage to buy part of the property, but this time, you will only need to borrow between 25, 50 or 70 percent of the total value of the property.
While all of the above ideas will work well, it is also a good idea to take another look at your income and expenditure. It may be necessary to cut down on unnecessary spending so that you can save more towards your deposit.
