New plan that could help first-time buyers get on the ladder explained

FIRST-TIME buyers could get easier access to mortgages to help them get on the housing ladder under new proposals.

Sky-high house prices mean it’s harder than ever for young people to save for their first home.

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Housing secretary Michael Gove revealed that the government is looking at ways to make it easier to get a mortgage.

Banks have their own criteria when assessing who to lend to, but they will check your salary and your savings.

Buyers need to stash away money for a deposit of between 5% to 20% of the value of the home they want to buy.

They more they’ve saved up for the deposit, the better mortgage they’ll be able to get.

But saving for a deposit is one of the biggest barriers for young people trying to get a mortgage.

Mr Gove, the secretary of state for housing, communities and local government, said the government will “look closely” at what can be done to help young people buy their first home.

Getting on to the property ladder depends on “improving their ability to get mortgages”, he said.

Many private tenants currently pay more in rent than they would need to pay for a mortgage on the same property.

The barrier to home ownership is saving the funds needed for a deposit – and only 3% have enough stashed away – Mr Gove added.

The minister said the government will make it easier to access mortgages, but didn’t specify how or when this will be done.

“Many people currently renting pay more to their landlord each month than they would need to pay to service a mortgage on the same property,” he wrote in the Mail on Sunday.

“More than half of those in the private rented sector could currently afford the repayment costs on a mortgage, but just 3% have the savings necessary to put together a deposit and meet the lender’s requirements for a typical first-time buyer’s property.

“We are looking closely at what more can now be done to help.”

Mr Gove added that another block to home ownership is the way the benefits system currently works.

People can get help to cover their rents but not mortgages, he said.

Mr Gove said the government has pledged to build 300,00 new homes every year and to invest in infrastructure around the properties.

What help is currently available for first-time buyers?

There are some schemes in place already to help first-time buyers.

The government has a help-to-buy equity loan scheme, which closes next year.

Under the scheme, the government lends homebuyers up to 20% of the homes value, or 40% in London.

You will need a deposit of at least 5% to be eligible for the loan, and you can find out more on the government’s website.

Some property companies are offering 5% deposits in preparation for the end of the scheme.

If you’re saving for a first home, you could open a Lifetime Isa, as the government will top up your savings by up to a maximum of £32,000.

When you open a Lifetime Isa the government will add 25% to your savings, up to a maximum of £1,000 a year.

That means if you put in £4,000 a year you’ll get a £1,000 free cash bonus to put towards your first home.

If you save the maximum amount between the ages of 18 and 50 you could get as much as £32,000 for free.

It can only be used for buying your first property or for retirement.

Other schemes, such as shared ownership, can also help people on to the property ladder.

The Sun spoke to a mortgage expert who shared his top tricks to get a loan when lenders are making it harder to get approved.

Each week, we speak to a first-time buyer as part of our My First Home series, including this person who quit the job she loved to save more money for a deposit.