Good News for first-time buyers, UK launched New mortgage scheme -mortgage rates
Good News for first-time buyers, UK launched New mortgage scheme – mortgage rates: Due to the cost of living crisis, rising mortgage rates, and skyrocketing rents, many Londoners believe they will never have enough money saved to purchase a home of their own. A new programme provides them with another way to climb the ladder.
Good News for first-time buyers, UK launched New mortgage scheme – mortgage rates
First-time buyers can use their monthly rental payments to accumulate a deposit with Fairview New Homes’ Save to Buy programme, which was first introduced in Epping Gate and is currently being expanded to the Dock28 development in Woolwich.
Under the programme, first-time homebuyers live in a home and pay a monthly “rent” that is based on their affordability as well as the average rent in the neighbourhood.
All of this goes towards increasing their deposit, of which they only have to make a one-percent initial contribution before moving in. They can complete their purchase and become the full owners of the property once they have increased their savings account to five percent, which typically takes six to twelve months.
For whom is Save to Buy applicable?
The programme requires that you be a first-time buyer who is at least eighteen years old, have a one percent deposit saved, have been employed full-time for at least three months, and be approved by a third-party financial advisor in order to be eligible.
The programme is first-come, first-served because Fairview received 17,800 inquiries when it first launched it in Epping Gate.
“We were considering purchasing, but we felt it would be a long way off.” After renting in Loughton for a number of years, executive assistant Eleonora D’Aietti, 33, and her partner Stanley, a lettings agent, closed on a one-bedroom flat in Fairview’s Epping Gate development in November.
D’Aietti claimed that “the process was very straightforward.” “We scheduled a viewing and were enamoured with the property.”
D’Aietti expresses her gratitude for being able to purchase It’s a good idea to check out a property before purchasing it so you can make your own decorating choices right away.
An additional advantage that came as a surprise was that the building insurance wasn’t paid for by the couple until five months after they moved in, during the contract exchange.
D’Aietti struggled to come up with any drawbacks, though she acknowledged that it was unfortunate that residents of one-bedroom apartments were not entitled to a parking space unless they owned an electric car. On the property, the couple has secured a fixed mortgage for five years at a rate of 5.8%.
Although there are several mortgage options available, only Nationwide was willing to lend to them.
The couple also pays a £500 one-time reservation fee, £1,495 in service charges, and peppercorn ground rent annually in addition to the mortgage.
“We intend to stay for at least three years, after which we hope to buy a larger home and perhaps begin a family.” D’Aietti states, “We’ll either sell it or rent it out. This is a question we posed at the outset. You are free to leave whenever you’re done because the property is yours.
Benefits and drawbacks of Save to Buy
According to Nadine Buckland, CEO of Zenzic Capital, “The government has a similar initiative, Rent to Buy [called London Living Rent in the capital], where rent is subsidised to allow tenants to build a purchase deposit more quickly.”
“However, in contrast, Save to Buy is less administratively burdensome, you can lock in the purchase price at the inception of the tenancy, it doesn’t require that you rent for two years first and 100 per cent of the rent is applied to the deposit.”
Additionally, Buckland commends the tenant’s ability to inspect a property before committing fully, as this indicates the quality of the building. “You get to ‘try before you buy’ at a significantly lower deposit than in the normal buying process, so it seems less risky than buying.”
The programme has benefits, according to Sebastian Murphy, Group Director at JLM Mortgage Network, particularly in relieving pressure on the second-hand property market where supply is limited.
“But doing this and only putting a one percent deposit down comes with a number of issues,” he says.
Because of the associated costs and the possibility that they won’t have paid off enough of the mortgage in that first period to guarantee that it is less than the value of the property, we would advise against doing this for anyone who might be looking to move again in the next 18 to 24 months.
“It’s important to remember that new constructions have some premium features.”
Murphy advises you to plan to stay in these properties for a minimum of five years in order to avoid negative equity and accumulate capital.
It’s also important to keep in mind that not all lenders will offer loans on this kind of programme.
Murphy adds, “It’s important to consider the lenders’ willingness to take on this business now and their potential future appetite for it.”
“They may decide that lending any more to potential purchasers is not right for them and pull out if they are overloaded with applications or if they feel overexposed in this area or to this type of property at some point in the future.”
Remortgaging onto a more favourable rate might therefore be more difficult than with a traditional model.
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