No Deposit? Here are some ideas to help get around this - 7/4/09

Author: Jeni Browne Posted on: 07 April 2009

Low house prices? check.  Good interest rates? check.  Big deposit available?.............................................................................damn.

The number of first time buyers looking to get on the property ladder has recently doubled on the back of lower house prices and interest rates.  However reports state that they are unable to pursue their purchase because of the level of deposit lenders currently require (20% or more in some cases).  Here are a couple of ideas which may help you to find a deposit to get you started.

HomeBuy Direct

Launched this month, this is where the Government have teamed up with property developers.  In essence, the Government will lend the borrower up to 30% of the purchase price, interest free, for up to 5 years.  This scheme is only available on selected properties so you would need to contact your local homebuy agent.

Other Government Schemes

There are various options available which broken down simply equate to two difference schemes.  The first is Newbuild HomeBuy schemes which are basically Shared Ownership schemes which allow the purchaser to buy a share of the property they wish to acquire (as little as 25%) and rent the remaining part of the property.  This is only available on newbuild properties.  The My Choice Homebuy allows you to select a property from the open market of your choice.  You would then apply for a loan of up to 50% of the purchase price which is then used as deposit - your income will need to be less than £60,000 to be eligible - contact your local Homebuy Agent to find out more (www.firsttimebuyermag.co.uk).

Good old Mum and Dad

At present, it is hard to generate interest on savings in excess of 2%.  Therefore arguably, now could be a good time for parents to lend their children money for a deposit which the children then pay interest to them on.  Equally, a share in a property could be a way for parents to earn a better return on their money.  Equally with interest rates being low, many parents are opting to borrow money against their own homes to help their children out with a deposit so that they can make their first property acquisition.  The difference in rates for a 75% and a 90% mortgage are astonishing so this really can be a financially prudent move.

Whatever route you take, there is no debating that now is a good time to buy, and with more initiatives available than ever before, making hay while the sun shines really is advisable.

Author: Jeni Browne