Saving for a Deposit
We know saving the deposit for finding your new home is the first big focus. This is the chunk of money that will pay towards the cost of the property you wish to purchase, This will be needed to gain your mortgage.
The average UK house price in March 2022 was £278,000, This is £24,000 higher then this time last year! This seems like a huge jump but there is so many options available to us all now, so it's not as far out of reach as you may think.
The average age of a first time buyer is now 34 so there is no need to panic if your not there yet. We have ways for you to achieve this.
Saving for a deposit can seem like a daunting thought, but the more you save the less mortgage you will pay. We are here to assist you with the task with a number of options.
How much will I need for a House Deposit?
You want to save for a deposit for your first house - where to start? The first thing you need to work out is how much deposit you will actually need. This can look a lot but don't panic, it will break down.
There will be several factors that go into how much you will need to save:
- How much you want to borrow
- The price of the property
- The percentage of deposit you need
An example would be if a property costs £200,000 a 10% deposit would be £20,000.
When looking at how much you need to save, bare in mind the larger deposit you make the lower the monthly mortgage payments will be. Percentages normally go up and down in multiples of 5, but the more you save initially the better for yourselves in the long term.
Some thing's to keep in mind when thinking of costs is that the higher the price of the house the bigger deposit you will need. So maybe set a maximum budget in what you can go to. Also there will be extra costs such as solicitors fee's and moving fee's to budget aside to your deposit.
The Shared Ownership Scheme through Platform Home Ownership allows you to purchase a share of a brand new build home without needing a large deposit as you would if you purchased a property outright.
How does shared ownership work
Shared ownership offers the opportunity to purchase between 25% and 75% of a property. You simply buy the share amount that suits your affordability and circumstances and then pay rent on the remaining share that you don't own yet. As Platform are a housing association, the subsidised rent will be considerably lower then privately renting in the same area.
Typically you only need a deposit of as little as 5% of the value of the share you wish to buy, meaning you could get on the property ladder much quicker than you thought.
Once you own share in one of our properties you can also look at staircasing which will be explained further down.
Just remember the bigger the share you buy in the first instant will mean the less rent you pay on a monthly basis.
Rent for today, buy for the future
The rent to buy scheme allows you to rent a quality new home at a reduced rental amount of roughly 80% of the market value, which allows you to save the remaining 20% towards a deposit with the aspiration of buying your home on a Shared Ownership or outright basis.
How does Rent to Buy work?
If you dream of owning your own home but you are struggling to fund the deposit required, rent to buy is the perfect route to help you achieve home ownership.
If you are a working household, you can move into a Rent to Buy property, With Rent to Buy, You move into your new home and rent the property on an Assured Shorthold Tenancy basis for a period of five years. During this time, you'll pay a reduced rent of just 80% of the full open market rent value. You can purchase your home from us on a Shared Ownership basis during years one to five, or on an outright basis at the end of your five-year term.
What are the benefits of Rent to Buy?
- You're able to move into your new home and save towards purchasing the property
- You'll pay a reduced rent on the property - 20% less then the market value
- You can settle in to your new surroundings knowing that you'll be able to buy the home you're renting
Who is eligible for Rent to Buy
In order to qualify for Rent to Buy, there's a small criteria you must meet. Including:
- Be registered with Help to Buy
- A working household
- Do not currently own a home
With shared ownership you will part buy, part rent your home. Through the staircasing process you can then buy a higher share in your home and pay less rent.
You can buy more shares in your home as and when you can afford it. The more shares you have in your home, the less rent you will pay, until eventually you own your home outright and no longer pay rent to us.
Buy a brand new home through outright sale
Outright sale is the most traditional way to purchase a home. This means you will own 100% of your home and will be the sole owner of the property.
Buying an outright sale property will mean you wont need to meet any eligibility criteria that may apply to some Shared Ownership properties.
Outright sale might also be referred to as Market Sale.
Tips for saving
- Debt payments Look at any debts you may have and get these cleared before gaining a mortgage. Any money you were looking to use to save split up so you could pay debts off quickly but any left over put aside for savings.
- Savings account Open a separate savings account with a good interest rate, this will help when adding your savings and will build up alongside. Set up a direct debit of a set amount to go into your savings account when you get paid, this can make it easier so you don't have to do it yourself.
- Set budgets Look at where your spending your money and set budgets for these. If you have say lots of takeaways or eat out a lot, plan to only do it once a week and the money you would have spent can go into savings.
- Extra income Can you pick up extra shifts at work, or is there's something creative you can do from home to earn some extra pennies to add to your savings pot.
- Money saving sites look for any money savings sites or apps and utilise these, also if you are a student check if your eligible for a student card which gives you access to discounts.
- Start paying your mortgage Once in a better position and closer to when you gain your mortgage, start 'paying your mortgage'. This way you get used to paying the mortgage but you could also add that into the savings to give you more in your pot.