Cut-price homes for first-time buyers
The odds have been stacked against first-time buyers but price slips, creative mortgages and a government scheme are helping them get the key to their own door. Sharon Dale reports.
THE rocketing rise of residential property values over the last three years has helped push home ownership out of reach for some firsttime buyers while others have had to lower their sights. So, house price decline is good news for those keen to get on the property ladder and there are deals to be had.
The only factor raining on this parade is mortgage rates, which rose substantially from a low base last year.
However, first-timers can still benefit from a 95 per cent mortgage from some lenders via the Government’s mortgage guarantee scheme, which has been extended until the end of December 2023.
Andrew Milnes, business principal at the Mortgage Advice Bureau, Bingley, and Yorkshire Post columnist, says: “If a first-time buyer has a 10 per cent deposit, there are over 170 mortgages available from 4.75 per cent interest and for a two-year fixed rate deal, the rate is slightly more expensive at just under five per cent. There are also over 70 deals for 95 per cent loan to value products.”
However, says Andrew, just as important is that lenders have become more creative.
He cites the Barclays Family Springboard mortgage, which facilitates up to 100 per cent lending by allowing a relative to lodge the 10 per cent deposit with Barclays for a five-year period. After five years, the relative gets the money back with interest.
The Nationwide has a Helping Hand Scheme that may help firsttime buyers borrow more if they take out a five or ten-year fixed rate mortgage.
“Lenders are also starting to look at a joint borrower, sole proprietor situation where they will take a family member’s income into consideration but not name them on the title deeds thus avoiding additional stamp duty issues,” says Andrew.
When considering what to buy bear in mind that an older property is generally less expensive than buying a new home but new builds that have been well-constructed will almost certainly be more energy efficient and running costs will be cheaper.
If you go for a new home then check the developer’s customer ratings as there are many excellent housebuilders out there along with some terrible ones.
The other advantage to buying new is that some housebuilders are taking part in the Government’s First Homes scheme as part of their obligation to provide a percentage of affordable homes.
The First Homes scheme offers discounts to first-time buyers from 30 to 50 per cent on properties worth £250,000 after the discount has been applied. In London, the maximum value is £420,000.
The discount remains in perpetuity so if you sell, you have to offer the same discount to a buyer so other first-time purchasers can benefit.
To qualify for the scheme you must be 18 or older, a first-time buyer able to get a mortgage for at least half the price of the home and you must earn no more than £80,000 or £90,000 if you live in London.
The local council may set eligibility conditions, including key workers, people who live in the area or can prove a connection to it and those on lower incomes.
Annoyingly, the Government website does not flag up sites with discounted homes so you will have to turn detective and call housebuilders when you hear of a new development to see if it is offering First Homes.
Yorkshire Country Properties worked with Kirklees Council to make use of the Government’s now defunct Starter Home scheme for first-time buyers and its successor the First Homes scheme and they are an excellent example of how well it can work.
There are now discounted, firsttime buyer properties on Yorkshire Country Properties developments in Netherthong and Shepley, all sold, and in Skelmanthorpe, where three of the six homes with 20 per cent off are reserved.
The remaining one-bedroom homes are on the market from £148,000 and eight more affordable houses are scheduled to be built at a site in Denby Dale.
Coun Graham Turner, cabinet member for Growth Regeneration in Kirklees, says: “It’s more important than ever for us to take advantage of government schemes like this to help people who live and work here to buy their first home.
“I would like to thank Yorkshire Country Properties, who have worked closely with our planning team to deliver this fantastic initiative.”
Sam McGregor, of Yorkshire Country Properties, adds: “We have been both proud and delighted by the success of the schemes.”
First time buyer Luke Brooker, now 28, was one of those who benefitted. His one-bedroom house in Shepley should have been £171,000 but with the discount it was £134,000.
A medical photographer, he is from Kirklees but had been living in Leeds paying £700 a month for rent and bills. He managed to save for a deposit on his own home via a Help to Buy ISA, now replaced by the Lifetime ISA.
He says: “The scheme for firsttime buyers made buying a house so much easier and I was able to buy a better property because of it.”