Inside: 5 Helpful Ways to Get on The Property Ladder. Collaborative post.
Getting yourself onto the property ladder might seem like a herculean task but, thankfully, there are plenty of steps you can take to make the process that much easier…
Nothing good in life ever comes easy, right? So, that’s probably why getting onto the property ladder is considered one of the most daunting and difficult prospects in anyone’s life.
There’s a lot to consider and, as you’ll be aware if you’re already on the hunt for your very first home, the difficulties don’t stop at trying to raise enough money for a deposit. You’ll have to apply for a mortgage, be accepted for that same mortgage, make temporary living arrangements if you’re currently renting and work with a conveyancer – and that’s before you even think about picking up the keys!
Thankfully, there are plenty helpful ways to get on the property ladder, many of which will be discussed in this post. So, whether it’s utilising the government’s Help to Buy scheme, or trialling some unique money saving ideas, the tips in this post should give you some inspiration…
5 Ways to Get to the First Step of the Property Ladder
- Take a Look at Government Backed Schemes
If you’re feeling a little overwhelmed by the prospect of having to save up for a standard 10-20 percent deposit (let’s face it, who wouldn’t?), then there’s no need to fret just yet. Over the past few years, the government have introduced a raft of different schemes which are designed to help people get onto the property ladder when they might otherwise struggle.
Help to Buy Equity Loan Scheme
The government’s flagship initiative is the Help to Buy: Equity Loan scheme. This allows first time buyers to put down a minimum five percent deposit of the price of a new-build property, instead of the usual minimum 10 percent. Homebuyers using the scheme must contribute at least 80 percent of the home’s price overall, with the help of their mortgage.
Mortgage Guarantee Scheme
If that doesn’t float your boat, then it’s also worth taking a look at the mortgage guarantee scheme. Under this scheme, households can put down a five percent deposit on properties costing a maximum of £600,000. Eligible households can apply for a 95 percent loan to value (LTV) mortgage with participating lenders offering a government backed mortgage guarantee scheme.
Shared Ownership Scheme
Still not convinced? What about shared ownership? This is where you can put down a smaller deposit, in return for the chance to buy a share of your home (between 10 and 75 percent of the home’s value). You then pay rent on the remaining share. If you can afford to do so, you can then buy bigger shares at a later date.
If you’re looking for more information on any of these schemes, it’s certainly worth visiting the government’s website. This way, you can take a closer look at which scheme you think would be helpful for your current situation.
- Pay Down Any Existing Debt
If you want to get onto the property ladder, you’ll be struggling to do so if you’ve got any outstanding debts that need to be paid off. So, before you start making enquiries, it’s important that you focus on getting your debts paid off in full.
One of the major factors mortgage lenders will look at when they’re carrying out affordability assessments is how much you spend every month on unsecured debt repayments such as loans and credit cards.
When you’re paying off debt, you should also be sure to pay it off the right order, reducing the borrowings with the highest interest rates, such as credit cards, first.
- Invest in Unique Money Saving Techniques
Granted, it’s very easy to say that you should carefully save your money. It doesn’t take a property expert to know that you’re going to need money when you’re buying a property for the first time!
That being said, you should try and make a concerted effort to save money as creatively as possible. A perfect example of the sort of unique solutions we’re talking about would be Moneybox’s ‘round ups’.
Whenever you complete a transaction, you can add the spare change to an account, which is then collected and put into a savings account at the end of the week. So, if you buy a cake for 75p, 25p will then be put aside and straight into savings. While this might seem like (literal) pennies at first, it’s amazing how quickly these small investments can add up!
- Pay Close Attention to Your Credit Score and How You Can Improve It
If you didn’t already know, your credit score will be mentioned a lot when you’re trying to get onto the property ladder for the first time. This means you’re going to have to pay close attention to it and all of the ways you can try and improve it.
A credit score, which is found in your credit report, details your outstanding credit agreements. This includes credit cards, loans and mobile phone plans, and assesses whether you make repayments on time and in full.
When handing out mortgages, banks and building societies will use these reports to decide whether or not they want to lend a mortgage to you.
You can check your credit score for free at any time and improve it by keeping on top of your repayments and repaying more than the minimum each month on outstanding credit card balances.
- Consider the Area You Want to Move to
The property market varies wildly from place to place, so you should be sure to keep that in mind when you’re trying to get on the property ladder.
For instance, if you’re looking to buy your first property in London, you’ll likely find it much more difficult than in the North of England.
If you think that property prices are out of your budget in your local area, it may be worth considering whether you can relocate to afford something that’s in your price range.
Are You Trying to Get on the Property Ladder?
In this post, we’ve taken a closer look at some of the ways to help you get onto the property ladder. It’s by no means a straightforward process, but these handy schemes and tips should help to set you on your way.
Are there any other ways of getting your first home that you can think of? If so, feel free to leave them in the comments below!