Owning our first home is a dream that many of us have. It’s somewhere to call our own, a place to put down roots, and a space that reflects who we are, what we want and what’s important to us.
But, (as you might have heard in the news), home ownership is becoming an increasingly hard thing to achieve. So, is it still possible to get on the property ladder without help from the bank of mum and dad? We think so…
How many first time buyers are getting help?
Recent studies have found that as many as a quarter of first time buyers turn to their parents when it comes to scraping together a deposit for a house, and some parents are even digging into their savings accounts to secure their children a 100% mortgage.
But why is this the case? Well, with the houses price in the UK (outside of London) averaging £273,000, many first time buyers feel that raising a 10% to 20% deposit on their own is simply out of the question with expensive rents, student debts and high costs of living.
However, the option of having your family members throw in a lump of cash is only open to people whose families who are wealthy enough to help and willing to do so. So what can you do if you’re getting on the ladder without a leg up from your mum and dad?
Option 1: save, save, save
Your first option is simply to save harder, and for longer. The best mortgage deals are offered to first time buyers putting down a deposit of 10% or more, so you’ll need to save as much as you possibly can every month and accept that it will might mean putting off ownership until you’ve got a sizeable deposit.
It’s not impossible, and it will definitely feel good to have earned every penny of your house in the long run. Mortgages with a 5% deposit are now available too, so there’s every chance you could go it alone and be moving in before too long.
Option 2: use a Help to Buy ISA
Many experts are calling this option a complete ‘no brainer’, so if you’re serious about getting on the property ladder without asking your mum and dad for help, open a government ISA.
The government’s Help to Buy ISA allows first time buyers to save up to £12,000, receiving a 25% bonus (£3,000) and as much as 4% interest; it’s a phenomenal deal, and essentially free money if you end up exchanging contracts! Best of all, two first time buyers are able to open separate accounts and benefit equally from the scheme, meaning if you’re buying with a partner you’ll be quids in – twice over.
Option 3: use the government’s Help to Buy Equity Scheme
This is another scheme provided by the government and works by allowing first time buyers to put down a 5% deposit on a house with the government providing a loan of up to 20% of the purchase price. This is helpful as it results in a sizeable deposit and therefore lower mortgage payments for the buyer.
If you go down this route, you will have to pay back the loan to the government every month, as well as meeting your mortgage repayments, but bear in mind that the loan is interest free for the first five years. New houses are often available with help to buy schemes, which means you could be moving your belongings into a new home that’s designed precisely to your taste, of solid construction and in a nice area without having to ask your parents for help.
But remember, the options we’ve discussed above aren’t your only choices: you can also ask the government to assist you with a Shared Ownership scheme or a Mortgage Guarantee scheme, or you could consider buying a property as ‘Tenants in Common’ with a few responsible friends.
Do your research and make sure you can afford whatever option you pursue, but above all else, don’t give up on the dream of owning your first home. It’s possible, even without help from parents!