Housing prices are out of this world. But, that doesn’t mean you can’t buy a home in today’s market. Here’s how to get it done and done, without spending more than you can afford.
If you can’t own a property outright, you might be able to share ownership. Even if you’re not married, this isn’t as hard as it sounds.
Some homes are more conducive to sharing than others. A shared ownership scheme lets you buy part of the property (up to 25% to 75%) from a local authority or a housing developer. The upside to this arrangement is you only need a low deposit and a smaller mortgage than a normal home purchase. This makes buying a property achievable if you’re having a hard time saving up the money.
The downside is that you’ll only own part of the property. The other part belongs to the shared ownership provider. You will have the right to buy the remaining part of the property at some point though. To be eligible for this arrangement, you need to work in an essential service, like a school (as a teacher), a hospital or doctor’s office (as a nurse), or be a family with a lower income.
Shared ownership schemes are also available on certain specified properties either as part of a new development project or on offer from a local authority. You also need to factor in the cost of the rent on the part of the property you don’t own, since you will be renting it. It’s not likely this will be a significant amount, but it impacts how affordable this will be for you.
Buying A New Home
New homes seem like an expensive way to purchase, and they normally are. But new home deals are more prevalent than you think. There are property schemes specifically offered by construction companies and property developers different from shared ownership schemes.
The positive side of this is that the construction company will offer to lend you money for a deposit, usually interest-free. This is so that you don’t need to come up with a lot of money out of pocket. Then, all you need in money for the mortgage. The downside is you will need to make arrangements to repay the property developer after the loan is up. You might be left with a huge debt to pay off if you don’t plan things out properly.
For example, the housing developer lends you 20% of the property value and ask to be repaid in 30 years. At the end of this term, you will need to pay the amount due. The people who are eligible for this type of offer vary. Sometimes it depends on where you want to buy and what’s available.
If you’re going through Entwistle Green — one of the longest established and most respected estate and letting agents in the North West of England — you should have no problem finding a home. But, you may not be able to pay for it by yourself.
If you’re a first-time homebuyer, you might need a guarantor. Usually the way these work is your parent acts as a guarantor on your behalf. It means you get to take advantage of their excellent credit history when making your purchase. So, instead of being charged “new homebuyer” rates, you get a more seasoned rate.
The mortgage will require a guarantor to provide their guarantee on your mortgage. Meaning, if you don’t pay the loan payments, the guarantor is responsible for them. This takes an awful lot of trust on the part of the guarantor, so usually they are structured between parents and their children.
The positive side of this deal is that you get a mortgage with the backing of someone with the credit history you need. The downside is you must have someone willing to trust you to meet your monthly payments. If you can’t get a loan on your own, it means the bank thinks you’re a bad risk. So, someone has to be willing to bet against the bank and for you. That could be a short list of people.
Buy At Auction
Some of the best deals you will ever get will be from an auction. If you’re good with a hammer and paintbrush, then you might get a property at auction for a lot less than if you bought it through a local real estate agent.
Of course the benefit of this approach is the cheapness of the home. Houses at auction are usually very low priced and you need to pay less upfront. Of course, there is a reason why they’re so cheap. Most of these homes are on sale because they couldn’t be sold on the open market. There is usually something that needs fixing or perhaps a total gut and rebuild job.
You should only consider this option if you are up for a project house and you want to put in the time to rehab an old home.
Rachel Daniels worked in the real estate industry for many years prior to having her daughter. Now a work-at-home Mommy of two she enjoys writing about the housing market and helping people to get their foot on the housing ladder.