That first home might seem like a long way off. Getting your foot onto the property ladder may well be the big plan, but when stuck in the rental market it may appear that you’ll never have anywhere to call your own.
It doesn’t have to be the case. With a number of houses for sale up and down the UK and with a little help on your mortgage, this year could be the year when your home owning dreams become a reality.
Need some help? Here are some options.
Joint-Parent Child Mortgage
If one of your parents is still earning or in receipt of sufficient monthly income from a pension you could enter into a mortgage together. This means that both your own salary and that of your parent (or their alternative income) will be taken into account when a mortgage lender calculates how much you can borrow. Once you get you foot on the ladder you may potentially be in the position where you can afford the mortgage payments yourself.
With this option, most lenders will specify that the names on the mortgage agreement must also be stated on the property deeds. This will lead to the situation whereby you and your parent both own the property.
Guarantor mortgages can take different forms. Some hinge on a parent acting as a guarantor for any shortfall in multiple incomes. Taking an example of you earning £20,000 at 3.5 times a single salary, you’ll qualify for a mortgage of £70,000. If the property you’re looking at is worth £120,000 your parent would be the guarantor for the £50,000 difference1.
Another situation where you can look at a guarantor mortgage is if you’re a graduate or professional where your salary is set to significantly increase. If you think this could apply to you, it’s something you should definitely look into.
When buying a home it isn’t just your mum or dad who can act as a parent. If you’re looking to get on the ladder with a new home, then a helping hand could be right around the corner. Many home developers run specific schemes whereby whatever you put in they’ll match it; up to 5%. That basically means if you’re looking for a home priced at £150,000, you’ll receive a contribution of up to £7,500 – who said you needed mum and dad.