It’s getting harder and harder to get on the property ladder these days. Despite many banks claiming that they’re approving more loans and mortgages than ever, people are still struggling to find the means to buy. It’s especially difficult if your financial record differs from the gold standard. If you’re self-employed, in debt or don’t have much in the way of savings, securing a mortgage is even harder than usual. Luckily, not all hope is lost. There are ways to secure your first home – you just need to know the tricks of the trade.
It can be extremely difficult to save up a deposit with the price of living in many places in the UK as high as it is. Luckily, there are ways to get around this. Some people have friends and family who can help them out, but for those who don’t there are other ways. The Government’s Help to Buy scheme is one solution, which allows first-time buyers to buy a house with only a 5% deposit. Most high street banks offer the scheme. You can also get an equity loan through the same scheme, which is interest free for five years.
If your income is limiting your choice of mortgages, you can try shared ownership. These are usually limited to people who earn between around £30,000 and £80,000. This works by you buying between 25% and 75% of the property, then paying rent and a service charge to the housing association. Your deposit and mortgage costs are then lower, because you only own part of the property. You can buy a larger percent of the property later on, and the money is split between you and the housing association when you sell.
Self-employed: Keep Excellent Accounts
Self-employed people should be sure to keep their accounts in tip-top condition. You should be doing this anyway, but it’s especially important for securing a mortgage. As you’re not paid through an easily trackable system like PAYE, banks want to see rigorous evidence of your income. If you currently rent, chances are your accounts are already in good order. Estate agents in Petts Wood, Orpington and all over the country often ask for a credit check before moving in, requiring two years’ worth of accounts. However, having tidy accounts won’t necessarily secure you a mortgage. Banks may still see you as a risk, with an income stream that isn’t as secure as someone who’s employed.
Debt might not pose as much of a risk as you think. Most people have some debt. Tell your mortgage lender how much debt you have and they’ll let you know how much you can borrow. If it isn’t enough, you’ll just have to tackle your debt first.
There are ways to get on the property ladder, if you know how the system works. Be prepared and you’re more likely to be successful.