Generation Z get a step up
BARRATT Developments has launched a new shared ownership scheme with Legal & General Affordable Homes, designed to help people onto the housing ladder or help them find a new home.The Kickstart scheme will be available to buyers who meet affordability criteria, with a maximum household income of £80,000, or £90,000 in London.
The scheme is being tested in England’s North,West, East and Midlands regions first and will allow those eligible to buy 10 to 75 per cent of a property and pay a subsidised rent on the rest. Its launch comes amid findings from a Barratt Homes study that 40 per cent of first-time buyers are being fed misleading mortgage information on social media.
One in three Generation Z members – 18 to 26-year-olds – seek property and mortgage advice from You Tube and one in six use Instagram. Even Tik Tok, which the American government is threatening to ban, is consulted by one in nine.
Misinformation includes over-emphasising strict employment history and tax account demands for mortgage applications.While these are important, says finance expert Terry Higgins of The New Homes Group, lenders generally focus on your income, regular expenses and whether you are living within your means.
“The lender’s job is to ensure your new mortgage is affordable both now and in the future.As much as lenders want to invest to help you secure a mortgage, they are also there to ensure the investment is the right opportunity for all parties.”
Higgins, who is helping Barratt Homes debunk social media myths, also points out not all mortgage agreements require huge deposits.
Skipton Building Society’s Track Record Mortgage is one of several no-deposit mortgages although, as it’s aimed at renters, successful applicants must be first-time buyers over 21 with 12 months’ on-time rent payments and a good credit score.
Developers including Barratt Homes also offer Deposit Unlock schemes for first-time buyers, which typically require only a five per cent deposit for selected new-build homes.
One way to boost mortgage loans, says Higgins, is to choose a longer repayment term – 35 years rather than 25 – as this makes monthly payments more affordable.
“What’s more, when you buy a new property you may be able to get a ‘Green Mortgage’ which often comes with either slightly lower interest rates and/or cashback or a free valuation.”
LIFETIME Isas (Lisas) also come in for social media criticism, because withdrawing funds for anything other than buying a home or retiring before 60 can mean losing the 25 per cent bonus.
But Higgins says: “Every year you can save up to £4,000 into a Lisa.The Government will then top up your contributions by 25 per cent. This means for every £4,000 you save; the Government will add an extra £1,000. You can then use these savings, including the bonus paid by the Government, as a deposit for your new home.”
As for Barratt’s Kickstart schemes, sales and marketing director Steve Mariner explains: “Your deposit is lower, your mortgage is smaller and you can buy a larger share in the future.”