Would you love to own your own home but think you can’t because everyone around you says you haven’t a hope in this market?
Don’t believe the hype!
There are several ways to afford your own home and the earlier you start saving the quicker you’re likely to get on the first rung of the property ladder.
Here are five ways you can get the keys to the door.
1. Get a savings goal
The average deposit for a first time buyer in the UK is around £20,000, according to the Nationwide building society. That’s a lot of cash to find, so it’s worth setting yourself a time-frame for getting that money together and working out how you will get there. Here are some ideas:
- Can you move in with family? If that’s a possibility you could put the rent you would usually pay into your savings each month.
- Look at all your daily spending and work out what you could cut down on for the next year or two including going out, takeaways and the like. The more you save the less time it will take to make that money.
- Aim to make at least an extra £100 a month with a side-earner. There are lots of ways to make extra money in your spare time such as doing focus groups, babysitting, waitressing, mending computers and more. See the Make Money section on my website, MoneyMagpie.com for all sorts of clever money-making ideas.
2. Get the Government to help
There are a few Government schemes around specifically aimed at first-time buyers and some help you to buy a place without a deposit. Find out more here.
Help to Buy Shared Ownership. With this scheme you get the chance to buy a share of your home (between 25% and 75% of the value) with a mortgage, and you pay rent on the remaining share. Later on, you could buy bigger shares of the property or buy the whole lot once you can afford to.
Help to Buy Equity Loan. This is a government scheme that helps buyers get a new-build property in England. It’s only around until 2020 so get it while you can. The way it works is it gives an equity loan of up to 20% of the price of the house you want to buy and it means that you personally only need to put down a 5% deposit but you still get to have a nice cheap mortgage.
Help to Buy ISA. This is a savings scheme where the government will top up your savings by 25%, up to £3,000. Your first payment to your ISA can be up to £1,200 and then you can pay up to £200 each month after that. When you buy your property, your lawyer will apply for the extra 25% cash. The nice thing here is that you don’t have to pay it back.
3. Bank of mum and dad?
Not all of us are lucky enough to have parents who can stump up the price of a deposit on a new home. But your parents or other family members could be guarantors for you. There are a few ‘guarantor mortgages’ on the market that enable family members to help you buy a property without actually giving any money. There’s even one where they put their savings in an account connected to your mortgage and get interest on it while it’s sitting there. Ask your mortgage broker about the guarantor products around.
4. Share with someone or no one
Do you have a good friend (someone you trust and can bear to live with) that you could buy with? Sharing the deposit, mortgage and living costs makes home ownership massively cheaper.
Another way to share is to go into a Shared Ownership scheme, ideally with a housing association or council. With these schemes you own a part of the property and then pay a small rent on the other part,
To get on one of these schemes, your household income must be less than £80,000 per year outside of London or less than £90,000 per year inside London. Find out more here.
There is a big difference in house prices around the country. If you’re serious about owning your own home, consider moving to a cheaper area. For example, in England, properties in the most expensive borough, Kensington and Chelsea, cost 44 times average local earnings, but in Copeland, Cumbria it’s two and a half times local earnings. Many parts of Wales and Scotland are considerably more affordable than southern England too. So spread your wings, take a few trips to new parts of the country and see what work opportunities are in or near the places you like the look of. It could open up a whole new life for you!
Jasmine is a TV presenter and money expert who is regularly featured on BBC TV, Channel 5, Sky News, Channel 4 and ITV. She is an all-round money expert who can speak on all aspects of personal finance and has been dubbed ‘the kind money expert’ as she approaches questions with understanding, equality and, when appropriate, humour. Jasmine set up the consumer website MoneyMagpie.com in 2008 and produces information every day on how to make and save money. MoneyMagpie now has over 70K subscribers to its weekly newsletter.