The Government has stepped in to help make saving easier. The newly introduced ‘Help To Buy ISA’ will hopefully make saving for a rst home quicker and less painful. Save £200 and the Government will contribute £50 each time.
The Government has also made it easier for first-time buyers to purchase new-build properties. With the ‘Help To Buy’ scheme, they still need a deposit of around 5%, but then the Government loan a further 20% interest free for the rst ve years, meaning they only need a mortgage for 75% of the property price. In London the loan is up to 40%. After year five they have to pay interest at 1.75% of the shared equity loan at the time they purchased the property, rising each year after that by the Retail Prices Index (RPI) plus 1%. Sell up or pay the mortgage back and they’ll be asked to repay the Government’s share of the loan, along with a share of any increase in the home’s value.
Another option for buying a first home in E14 is shared ownership, which allows a would-be homeowner to part-buy, part-rent their property. Back in 2011, there were 856 shared ownership properties in E14 and given the national growth rate there should be around 1,010 now. Under this scheme, owners start
Shared ownership isn’t available to everyone though. Applicants must earn less than £60,000 per year (with some flexibility for London buyers) and be a first-time buyer. Once that’s all sorted out, the first- time buyer will need to look at how much their monthly repayments will be and whether they’re affordable.
It’s likely that six months of bank statements will be required to check on financial behaviour and spending patterns. Any regular payments, such as loan repayments, utility bills, childcare or travel costs will also be looked at. After the credit crunch made the banking world considerably more cautious, a lender will also carry out a ‘stress test’, where they check to see if the borrower could still afford the mortgage if they were to lose their job, have children or their personal circumstances changed.
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