FIRST TIME BUYERS:
THE OPTIONS
Sarah Barnes, head of residential property at Napthens, looks at what help is out there for first-time buyers
There are plenty of incentives currently in place for first time buyers hoping to take their first step on to the property ladder.
At Napthens we regularly act for purchasers who receive contributions towards their deposit, mainly from close family members. These contributions are usually treated as ‘gifts’ which the mortgage lender will need to approve. Of course, not everyone has access to this type of assistance – but there are a number of ways in which first time buyers can get help.
For those who cannot afford to simply gift a sum of money towards the purchase of a property, they can contribute by way of a ‘springboard mortgage’. This means the purchaser does not have to find a deposit, but instead, the family member or friend can provide 10 per cent of the property purchase price as security. The money is paid into a separate account with the bank and earns interest over a period of time.
As well as checking details of the mortgage offers your bank may have, it is also prudent to speak to an independent mortgage broker, one with access to the whole market, to ensure you know about all the options out there.
The government Help to Buy schemes are a hot topic, with first time buyers having the option to obtain a Help to Buy equity loan or Help to Buy ISAs. A large proportion of our first time buyers have enlisted the help of these schemes. It is important to be familiar with the details of these schemes. The government has made lots of information available to try to ensure there is no confusion regarding eligibility.
As well as Help to Buy, shared ownership is an option, whereby you can purchase a 25 per cent – 75 per cent share of a property, with the Housing Association owning the rest. You would then arrange to pay rent on the share owned by the Housing Association. These types of property are leasehold, and you will need to ensure you are comfortable with the obligations set out in the lease.
You will also need to check your eligibility for this type of property, as there are criteria to be met.
At Napthens we are experts in advising first time buyers in relation to any of the options mentioned above – and we are able to provide clear advice regarding purchase of leasehold properties.
Please contact a member of our team if you need advice.
Sarah Barnes is a partner and heads up the residential property team at North-West law firm Napthens
www.napthens.co.uk
