How to Get on the Property Ladder

Published / Last Updated on 01/03/2021

Take a longer term mortgage over say 30 or 35 years.  This will make initial mortgage payments more affordable and as you settle into your new mortgage you should gradually increase how much you pay each month so that mortgage overpayments will reduce the term of your mortgage.

Consider a Family Mortgage if parents or grandparents have significant equity in their own homes.  Some lenders will accept that you have say a 5% deposit.  The equity in a relative’s home may be used as an additional deposit.  You still pay the mortgage based upon just a 5% depost but the bank or building society have the security of an equity charge over your relatives property.  After a few years of you paying the mortgage regularly, the charge on your relative’s property will be removed, they then receive some interest on what was used as ‘equity’ and you now hav ethe full property and mortgage in your own name.

Help to Buy Scheme – this was due to end on 31st March 2021 but has now been extended to 31 July 2021.  You put a 5% deposit down and the government lends the other 20% of a deposit.  Ov the 5 years, no interest is paid but when you come to repay the 20% (or in part) the government are repaid in the proportion that the property has grown.  No wonder the Government want and need property prices to increase.

Lifetime ISA (LISA) – is where you can save up towards a deposit for a home. You must over 18 but under 40 to open a Lifetime ISA. You save up to £4,000 each year, until you're 50. Likewise, if you have a partner they can also save £4,000.  The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.  E.g. over a 3 year period, if you save £12,000 you then get a government bonus of £3,000.  If you combine this with a partner, between you you could save £24,000 over a three year period and get a £6,000 government bonus.  That’s your £30,000 deposit saved.

Mortgage Guarantee Scheme – The Government has also suggested in March 2021 Budget that they will launch a government backed high loan to value mortgage guarantee scheme.  In short, you save just a 5% deposit and want to borrow 95% loan to value as a mortgage.  Lenders are reluctant to lend such a high amount but with the government insuring the risk of default, lenders will accept just a 5% deposit.

We suggest you try and make use of as much helps as there is out there.

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