With the average deposit required to secure a home appearing as an impossible sum, many first time buyers are increasingly struggling to get a foot onto the property ladder. Many mortgage lenders require deposits in excess of 25% which delays the prospect of home ownership, as substantial deposits are saved for. Many UK house builders with well established names offer selected special deals to first time buyers, giving them the opportunity to buy a brand new home with a low deposit.
The schemes outlined here do not involve shared ownership. Here is a selection of three of the best offers currently available to first time buyers:
1. Barratt Homes Head Start Scheme: This scheme is available on selected Barratt Homes up to a value of £300,000. The first time buyer puts down a deposit of 5% and takes an 80% mortgage. The other 15% of the purchase price is paid by Barratt Homes with an interest free loan which is repayable within ten years from completion.
The buyer does not need to make monthly payments towards the loan so could save to repay it in one lump sum in ten years and thus accrue interest on their savings. The loan can be paid earlier of course and needs to be repaid if the property is sold within the first ten years. The purchaser will need to pay the usual closing costs and legal fees, plus pay a £500 Head Start Scheme reservation fee which is refundable upon completion.
2. Taylor Wimpey Easy Start Scheme: This is an almost identical scheme to the Barratt one except that it is only available on selected Taylor Wimpey homes up to a value of £150,000.
3. Taylor Wimpey Deposit Match Scheme: Whatever your deposit is up to 10% of the purchase price will be matched by Taylor Wimpey in the form of an interest free loan. First time buyers with a 10% deposit could own immediate equity of 20% of the property with this scheme. The loan is repayable within 10 years in up to 3 repayments.
Loans which are not cleared in full within 10 years will attract an interest rate of 2% above the Bank of England rate. The scheme requires a reservation deposit of up to £1000 and Taylor Wimpey say they could pay your stamp duty and legal fees too. This point will be determined on individual applications.
These schemes can be of great benefit to first time buyers enabling them own a home sooner rather than later. Naturally one should factor in the prospect of repaying the interest free loans within 10 years, in addition to making the usual monthly mortgage payments.
Sources: Barratt Homes and Taylor Wimpey.