If you are not able to build a big enough deposit and starting to feel that owning your own home is just a pipe dream, do not despair. Here are several ways to get onto the property ladder without a hefty lump sum.
Getting a foot on the property ladder can be a tricky business if you are a first time buyer, with high deposits demanded by the banks before they will consider lending. However there are other ways to buy your dream home if you have little in the way of a deposit.
A shared ownership (or shared equity) scheme allows you to purchase part of a property (usually between 25%-75%) and rent the rest from a local authority or a housing developer.
There are schemes specifically offered by construction companies and property developers that differ from shared ownership schemes in that you will usually be able to buy the whole property, rather than just part.
There are some first time buyer mortgages which allow someone (usually a parent) to act as a guarantor on your behalf.
Typically these mortgages will require your guarantor to provide a guarantee that your mortgage repayments will be met on time - this may mean making the payments themselves if you are unable to do so.
If you are good with a hammer and paint brush, then you could get a property at auction for significantly less than if you bought via your local estate agent.
If you are starting to feel that buying a home on your own is too big a financial commitment then you could consider purchasing a property with a partner, family member or close friend.
While the days of 100%+ mortgages are seemingly behind us, at least for now, some mortgage providers are beginning to return to the higher lending market, offering 95%+ LTV mortgages.
The UK government offers a Help to Buy scheme that is designed to help anyone with a small deposit buy a property worth up to £600,000 to live in.
If you have a small deposit a shared equity loan could make buying a home more affordable.
With a shared equity loan scheme you typically need a minimum 5% deposit but will then be able to borrow up to 20% of the property value to reduce the amount of money you need to borrow with a mortgage.
A new Help to Buy ISA was announced in the 2015 budget which offers first time buyers a 25% bonus when saving toward a deposit.
Under the scheme, which will be available from autumn 2015, the government will add an extra £50 to ever £200 you save. Check out our Help to Buy ISA guide for more information.
If you are in no rush to buy then your best option may be to save as much as possible now to reduce the amount you need to borrow at a later date.
You should also use this time to pay off any outstanding debts you currently have, so that you can then afford to save more each month and reach your target quicker.
Doing this will also allow your money to work for your benefit once your debts are cleared, earning you interest rather than having to pay interest to the bank on credit cards or personal loans.
To make sure your savings are working as hard as possible, use our savings comparison table to compare the best savings accounts on the market and find the best home for your savings until you can afford to buy.
When you have saved up a deposit, it can be tempting to use it all to get the best possible mortgage deal. Read this guide for advice on how much of your savings you should put down as a deposit.
If you are struggling to save for a deposit, when you do start being offered different mortgage products you still need to consider if you can truly afford the monthly repayments.
You should also factor in the extra costs associated with a mortgage, including legal fees, moving costs and stamp duty.
For a step by step guide to buying a property try our guide How to buy a house which will guide you through each part of purchasing a property.
Thanks to all for your replies
Can I get a mortgage using my restaurant ?
I applied for a shared ownership house, if they accept you the reservation fee payable was £250, this was deducted from the balance of £22,000 when I paid them the balance, the only other expense was rent of £165 a month....I had an unexpected accident 2 years ago, worried about money I spoke to the HA and they helped me get a rent rebate from the council lasting 8 months before I went back to work, certainly made me feel less stressed
I must say that overall I am really impressed with this blog.It is easy to see that you are impassioned about your writing.
On the downside regarding house building insurance, my housing association insisted we all have the same Insurance Company, fine when it was £160 a year, but last year it jumped up to almost £400, I said to them you've got to be joking I am living on a pension, I went to Tesco and it cost £14 a month for Buildings and Contents, and I got a £50 gift card from them, ££££
Sounds like a right complicated f**k about....What happened to the good old days when all you needed was a 40 hour a week job,any job really,to be able to afford a house? Don't you just love this "freedom" and "democracy"? 95% of working people have less expendable income that they di in the 1950's in GB. You'd have thought as time went on the 'powers that be' ( read: Banks & Governments) would have more expertise in creating a fairer society for all? ......Unless they really don't give a monkeys toss about the masses? What's your take on this?....Is the public being played as fools by the corporate elite or is this just one big coincidence?
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