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How can first time buyers get onto the property ladder amid rising house prices?

View profile for Natalie Bradley
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The latest house price data compiled by the Land Registry, showed an average annual house price increase of 2.2% in December, with all regions of the UK experiencing an uplift.

The surge in house prices over the last few months can often be frustrating for those trying to get on the first rung of the property ladder. Here, Stephensons’ partner, Natalie Bradley looks at the funding options open to first time buyers:

Help to buy

The help to buy ISA is no longer open to new applicants. Therefore, unless a first time buyer already has one open they will not benefit from the government bonus. Existing account holders can continue to save and earn a maximum bonus of £3,000. The bonus must be claimed by 30 November 2030.

The help to buy equity loan scheme is still open. This is currently open to first time buyers and people looking to move but is only available on a new build property. A buyer will need to provide a minimum of a 5% deposit and the government will then lend between 15-40% (dependant on region) by way of loan.A help to buy loan is interest free for the first five years and fully repayable after 25 years. The repayment amount is linked to the amount you borrowed.  Therefore, if you borrow 20% when you come to repay you will be liable for 20% of the market value at that time. 

The scheme will run until March 2021 and will then be replaced by a new scheme. We understand the new scheme will be limited to first time buyers only and subject to regional caps. 

Lifetime ISA

A further ISA scheme is available called the lifetime ISA (LISA). The aim of this is to help 18-39 year olds save for their first home or their retirement. Savings up to £4,000 per annum are eligible for a 25% bonus, and the bonus is paid monthly. Under the age of 60, the funds must be used towards the purchase of your first property (subject to a property value cap of £450,000).

Springboard mortgages

Springboard mortgage offers have been on the market for some time but we have not really seen much take up. A first time buyer will need to offer a 5% deposit, and a family member can then offer a further 10% which will be paid into an account with the lender. The 10% is held for a fixed term of three years. If the buyer has then kept up with their mortgage repayments over the three-year term then the family member will receive their 10% contribution back with interest. 

What about help from mum and dad?

We do see a lot of people benefiting from family gifts to get them on the property ladder which is acceptable to most lenders as long as the family member has no legal interest in the property. A family member could also choose to guarantor a mortgage if the first time buyer does not have sufficient credit.

Our award winning conveyancing team can answer any questions you may have about buying or selling a property. Call us now on 0175 31 6399

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