As UK house prices have escalated out of the reach of the first time buyer many people have had to resort to moving into rented accommodation to get a roof over their heads. An Englishmans home is his castle and with the average UK mortgage now being in excess of 100,000, it is now an extremely expensive commodity and the dream of owning your home is looking bleak for the first time buyer. The truth is that house prices have outstripped incomes and as a result affordability has become a big, big problem. All is not lost, so, what are the alternatives and how could you become that homeowner? Let us look at some alternatives that could be considered: - * Shared ownership
* Parent guarantee schemes
* Buying with friends
* Shared equity schemes
Shared Ownership Mortgages
If you are unable to buy a property outright on the open market, then shared ownership is the ideal solution for you. Shared Ownership is a part buy, part rent scheme, which enables purchasers to buy a home in stages. Purchasers can buy an initial share between 25% and 75% of the value of the property and pay a subsidised rent on the remaining value of the property. Shared ownership properties can be provided by housing associations, housing trusts and local authorities. These organisations try be as flexible as possible with regards to the initial share purchased, but this may be as much as 50% of the market value at some of their developments. A service charge will normally be payable to cover the cost of communal maintenance. The service charges payable can remain the same whatever percentage you own of your home and continues to be payable should you purchase your home outright where possible. You will need to have sufficient savings to cover the initial cost of home ownership: legal fees and stamp duty for example. You will need to be able to meet the costs of rent, mortgage, service charges and other associated outgoings. As your income increases, you can buy further shares of your home until you could own 100% of the value and no longer share the ownership with the housing association or trust. The greater the percentage you own, the lower the percentage on which you pay rent. However, if you do not wish to buy more shares in the property, you do not have to. Obviously, the more you own, the less you pay in rent. And, if you can buy your home outright in the future, then no rent will be payable. Having found the shared ownership house of your dreams a good whole of market mortgage broker should then be employed to find the best and cheapest shared ownership mortgages. Careful searches can reveal 100% shared ownership mortgages that will not require a deposit, even if you have an adverse credit history. Finding the right mortgage is a very important financial decision in life as it is more often than not the largest single expenditure in peoples lives! People will often search the supermarkets shelves for bargains choosing products for the sake of a 1p or 2p saving per item and theres nothing wrong with that; I do it all the time. Our parents teach us to be frugal with money in our up bringing and we sometimes become animals of habit throughout our lives. Through the generations, inflation has seen prices increase ten fold and who would have thought years ago that the price of a loaf would touch the 1 figure. The same can be said about UK property, as the housing market has exploded and the average mortgage has gone way above the 100,000 figure. This is before we align our currency and interest rate with the euro. Ireland has seen a massive explosion in property prices in the post years of joining the euro and it is now an extremely expensive place to buy property. Consider this as a normal mathematical comparison. A 2% saving on a 100,000 mortgage works out at 2,000 per year and assuming that this saving can be made every year by remortgaging and moving the mortgage to another lender, it equates to an astronomical 50,000 saving over the normal mortgage term of 25 years. It just doesnt make sense to be putting an extra 40 per week into a lenders pockets when they already make billions of s net profit per year. Most of us have all experienced hard times at some stage in our lives and received letters from banks telling us that they are going to charge us 27 for bouncing a cheque or non payment of a direct debit or standing order. Now is the time to hit back and take some of that money back from them by taking advantage of the discounts that they have to offer to borrowers. So, if there is massive saving around like that, why do people not remortgage more often? Surveys conducted by lenders have identified that some people are just not aware, whilst others have said that they just could not be bothered. Some people have stated that the mortgage market is just too complicated. Well, the range of UK mortgages has increased dramatically over the past few years. Although this increase in mortgage types has added complexity, it has also introduced fierce competition, which has in turn resulted in the availability of some very attractive mortgage products for the customer. With over 10,000 mortgage products to choose from, how do we ensure that we get the best mortgage and remortgage rates? Employing the services of a whole of market mortgage broker (the equivalent of a supermarket) can pay dividends here, as they have sophisticated computer software to narrow down the best rates for buying with friends, equity share mortgages, parent guarantee schemes and shared ownership mortgages. |
