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Getting on the Property Ladder

It is not an easy thing to do these days, however there are many benefits to getting yourself on the property ladder, making it well worth the effort. A bit of tightening of the purse strings now will set you up for future moves up the ladder to better properties and more equity behind you.

For most people, the hardest part of buying their first property is getting the necessary deposit together, with the high prices of houses finding the five to ten percent generally required is a real challenge, especially when you take into account the over costs that need to be covered such as stamp duty, solicitors fees and so on.

Borrowing from parents is a popular option, not least because they tend to offer very favourable interest rates. In all seriousness, this is a very good option if it is open to you, be aware though that there may be tax implications associated with this, so do check this before hand. When and how you repay this is something for you and your parents to agree on, as is if there will be any return for them on the money.

If your parents do not have the cash available for you to borrow, they may still be able to help you in getting your mortgage by acting as guarantors for it. While this won’t help with the deposit, it will increase the amount that you can borrow and so allow you to purchase a property the value of which is in excess of the regular four times your salary limit. Being guarantor will mean that they will be pursued for payment should you fail to meet them, so make sure that you do not overstretch yourself.

There is a way to cut the cost of buying a house in half, thirds or even quarters – find some friends who are also looking to buy and do so together. This approach is becoming more and more popular, especially in expensive areas where the prices rule out most from being able to afford to buy on their own. Mortgages given to groups of two or more people are know as tenants in common mortgages, and they have different requirements and characteristics than standard mortgages.

The borrowing limits for these tenants in common mortgages are calculated as three times the main salary, and then a sum of the others. The exact calculation varies so this is something that you would need to check with the mortgage provider. Obviously sharing the ownership of a home with others is a big commitment, and you need to be sure that it will work out. No matter how good friends you are, you should get a contract written up by a solicitor detailing the agreement between you, covering who pays what, who owns what and the actions that will be taking should someone wish to sell.

While it can prove challenging, getting a foothold on the property ladder needn’t be impossible, family and friends may be the answer if you are finding it tough to get the money needed, while special first time buyers mortgages requiring lower deposits and offering longer repayment terms could be what you need to get you on the road to home-ownership.