It may seem like a monstrous task but, it is possible to buy a house if you are on your own.
There is no doubt that rising living costs and changing house prices has made many feel that their financial security is at risk or that the possibility of owning a home is now impossible.
If you are looking to buy on your own and are fortunate enough to still have a decent income, now could be a great time for you to save as much money as possible, with a view to build up the largest deposit you possibly can.
Whether you are first-time buyer, recently divorced or simply not yet had the opportunity to buy on your own, Boxall Brown & Jones is here to help and provide the best advice to get you moving as smoothly as possible.
Mortgage lenders and solo buyers
Many buyers focus on the end goal and often forget the stepping stones you need to get across to reach that point. If buying a property for yourself is something that you are just starting to think about, it may be worth contacting a financial adviser to create a savings plan.
It is important to remember that it is not impossible to buy a property because of your complicated circumstances, you can do this! You need to understand different lenders and their criteria, then get creative with the solutions.
If you are ready to move to the next stage, here are some simple tips which may help.
Factor in all the costs
Many people look at the price of the property they want to buy and completely forget about solicitor fees, stamp duty (if applicable), mortgage arrangement fees, a removal fan, the new sofa they need and other costs.
A good way to be prepared for this is by adding 15% to the purchase price to arrive at the true figure. Affordability is the first thing to consider, before looking at schemes which apply to your circumstances.
Some first-time buyers assume that stamp duty will be waived, due to exemptions that have been created for first-time buyers. However, this only applies to properties that are worth less than £300,000, with a reduced rate in some other instances. It is important that you find out what exemptions apply to you before making your calculations.
Am I too old to buy a house?
Some schemes which are available for solo homeowners or first-time buyers only apply to those aged under 40. Think about how long you intend to keep working, as this will affect how long you can extend your mortgage for.
It is possible to benefit from schemes including Older People’s Shared Ownership, which applies to people aged over 55. Retirement Interest Only (RIO) mortgages can also benefit older borrowers.
What about shared ownership?
With Shared Ownership, you can buy a percentage of the property and rent the rest from the local authority. Some schemes allow you to buy the remaining percentile later on, though other Shared Ownership homes will always remain partly the property of the local authority.
These kinds of properties typically require a smaller deposit than homes bought on the open market but be aware that you must be able to afford your mortgage along with the rent and any service or maintenance charges put together.
There could be restrictions on changes you can make to the property as well and selling the property can be complicated.
What is shared equity and how is it different to Help to Buy?
Under the Government’s equity loan scheme, it is possible to get a mortgage to cover 80% of the price of the property and borrow the other 20%. For the first 5 years, you will not pay an interest on that loan. Help to Buy is similar to this, which has been extended to 2023.
The government will lend homeowners 20% of the cost, in a loan which is interest free for the first 5 years. This only applies to new build homes and may be hard to come by.
It is important that you check that your desired property is included within this scheme, as some properties may be cheaper if they are not bought through the Help to Buy scheme.
How your lender will calculate your mortgage
If you purchase a property outright, be aware that a lender will take a granular approach to your outgoings. This means that they will be looking at not only your salary, they will also look at the net disposable income available.
This can include what you currently pay in rent – so make sure that you factor this in before you apply. Different lenders have different ways of assessing your circumstances, so it is worth getting an independent advisor to find the one that applies best to your situation.
Joint Borrower, Sole Proprietor
Joint Borrower, Sole Proprietor allows multiple incomes to be considered when it comes to calculating a mortgage, but their names will not appear on the deeds. It can allow you to borrow more money for your dream home if you have a deposit, but not a very high income.
The only downside is it often will not let you go beyond a certain age. People with relatives who still have plenty of earning years left may find they have a greater choice of lenders for a mortgage of this type.
Should I buy with someone else?
Some lenders will take a lodger’s income into account if you buy a place with more than one bedroom.
Siblings can also buy together however, you should be aware that once you eventually sell the property, you will no longer be eligible for schemes for first-time buyers including the stamp duty exemption, and it may be difficult for one sibling to take on the mortgage alone if the other one leaves.
Even if the well-known buying schemes do not suit you, there is still away of getting your first home. Parents and grandparents can release some of the equity from their homes under a revision scheme.
This releases some of the value of the property which will then go to the firm it is sold to after the death of the owners, who can live in it until then as tenants.
If some of the equity is released from the property, this could be blended with a mortgage for a smaller percentage of the cost of the property and could work out cheaper overall.
So, what do you think of these tips? Did they help?
At Boxall Brown & Jones, we are dedicated to finding the right home for all our clients, regardless of circumstances. Why not browse our properties and get in touch with our home team today? Click here to start your search.