Getting a foot on the property ladder is becoming more and more difficult for people of all ages. Not only is the price of property in many parts of the UK continuing to rise, but the majority of businesses still only pay their employees minimum wage, so many fear that they will never be able to own their own home. Thankfully, there are lots of different options available to explore if you’re a first-time buyer trying to get a residential mortgage on a low income:
There are a few ‘help to buy’ schemes available that are specifically designed to help people get on the property ladder. A new Government scheme was introduced in April this year and it is set to run until March 2023. Simply put, this scheme involves the Government lending buyers up to 20% of the value of their new home, and 40% in London.
This scheme provides buyers with the opportunity to pay a 5% deposit rather than a 10% deposit, which makes saving for this initial payment much easier when you’re on a low income. With a lack of 95% mortgages available these days, this scheme is really beneficial.
Another scheme that falls under the help to buy umbrella is shared ownership. For lots of people, this is a great option to consider and simply put, with shared ownership, you will own part of a property and pay rent on the remainder. This significantly reduces the deposit you need to save and also the amount you need to borrow from a lender.
Commonly, the shares offered in a property are between 25% and 75% of the value, and you often have the ability to buy a larger share in the future; this is known as staircasing. Not to mention, you can also sell back your share later down the line and use this money as a deposit for a new property.
Many don’t realise that family mortgages, like the Family Springboard Mortgage from Barclays, exist and they are another brilliant solution for anyone who is on a low income. With this type of mortgage, you won’t need to save for a deposit and instead, a family member will put 10% of the purchase price into a savings account with the lender.
After a set period of time, which is usually 3 to 5 years, if you have kept up with your mortgage repayments then your family member will get their money back, along with any interest accrued during this time. With a family mortgage, you will still own the property in the same way you do with any other type of mortgage too.
Another option to consider when you’re on a low income is a guarantor mortgage. This is a similar concept to a family mortgage, however, it involves a family member underwriting your mortgage repayments. You will need to save for and put down a deposit as normal on a property when you opt for a guarantor mortgage though.
The good thing about this type of mortgage is that you will often be able to get a bigger loan when you have a guarantor than you would independently. Due to the fact the guarantor provides the lender with the added comfort that they will always get the mortgage repayments, they’re more likely to offer mortgages with a higher Loan to Value.
Since being established back in 2001, here at Mortgage Required we have been providing professional and friendly mortgage advice to our customers. If you’re looking for a Mortgage Adviser in Slough who can help you get a mortgage deal, regardless of your current circumstances, be sure to get in touch with our team and we will do all we can to assist you. Unlike other mortgage brokers, we provide a whole of market service for mortgage deals and we are dedicated to delivering first-class customer service.
Why not book a free mortgage consultation with a qualified Mortgage Adviser today via our website? You can either meet us in one of our offices or we can arrange a telephone meeting, whichever is more convenient for you. Whether you’re buying your first home or looking to upsize your current home, we look forward to hearing from you.
8 days ago
Selling up? It’s important to make your house as appealing as possible to potential buyers. Good decorating can help with first impressions, and increase the perceived value of your property.
27 days ago
With the cost of living affecting so many of us, we have made a list of budget-friendly activities and ideas for you.
21 Jul 2023
Moving soon? It's never too early to get organised! Be prepared and avoid unwanted stress by checking out our list of tips to get you ready for moving day.
27 Jun 2023
Inflation simply put, is the increase in the price of something over time. The Office for National Statistics (ONS) tracks the prices of hundreds of everyday items and these items are updated to reflect shopping trends.
20 Jun 2023
We are often asked if it's good advice to consolidate “unsecured” debt (credit cards and loans etc) into your mortgage, the answer is, sometimes.
16 Jun 2023
When you’re looking to buy a home, and you own a car, you ideally want to know the rules on parking in the area. Parking rules can be confusing, even for the most experienced of drivers! This is why we have written this blog to help you.
6 Jun 2023
There are several potential sources you can consider when it comes to getting together a deposit to buy a property. Providing proof of the source of your deposit is a key requirement in the application process and will need to be given to both the lender and the solicitor.
26 May 2023
Mortgage Prisoners are people who are unable to switch mortgages to a better deal, despite being up-to-date with their mortgage payments.