FIRST-TIME buyers put off buying a property by hefty upfront deposits can get a foot on the ladder with a range of 100 per cent mortgages launched this year.
We round-up some of the mortgages below, as well as the first-time buyer homes you can then snap-up using them.
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What are 100 per cent mortgages?
For first-time buyers, 100 per cent mortgages typically see banks lend them the entire value of the property without a deposit, but family members’ cash is put up as an effective deposit instead and then repaid later down the line.
In other scenarios, parents act as guarantors with their own homes at risk if first-time buyers miss mortgage repayments.
Lloyds Bank and Halifax have both released deposit-free deals for first-time buyers this year, as long as a family member stumps up 10 per cent, which is later repaid by the banks plus interest.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a grim task but there are schemes out there to help first-time buyers own their own home.
- Help to Buy equity loan – The Government will lend you up to 20 per cent of the home’s value – or 40 per cent in London – after you’ve put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
- Lifetime Isa – Another Government scheme that gives anyone aged 18 and 39 the chance to save tax-free and get a bonus of up to £32,000 towards your first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
- Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you’re restricted to specific ones.
- “First dibs” in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
- Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England to be sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest here.
This year also saw Barclays extend its no-deposit deal for homes costing up to £500,000 – again, as long as a family member puts up 10 per cent as collateral.
The Post Office’s Family Link Mortgage works in a similar way, requiring a family member who is mortgage free to stake 10 per cent of their property’s value against the mortgage.
Building societies including Bath and Loughborough also and more also offer varying 100 per cent mortgages.
Of course, be aware that with most of these mortgages, whoever is guaranteeing your loan will likely be liable for your repayments if you miss them.
You also may end up in negative equity – where your home is worth less than your mortgage – if prices fall.
What properties can I buy without a deposit?
Despite a 100 per cent mortgage covering the cost of any future home, banks will still only lend you what they think you can afford to repay.
Typically, you can borrow around 4.5 times your salary as a mortgage.
So take the median UK salary of £30,420 a year, according to the Office for National Statistics, and that means you could snap up a property worth up to £136,890.
To give you some examples, we’ve pulled out some properties currently up for sale on property portal Zoopla costing £125,000 or less around the UK.
Three-bed terrace, Hull
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This three-bed terrace in East Yorkshire is on the market for £120,000.
It may not look like much on the outside but it’s been recently renovated throughout, and comes with front and rear gardens – although they’re both paved.
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It’s got two double bedrooms, one single bedroom, and one bathroom with a ginormous bath tub in it.
The property is freehold and there’s no chain, which makes it ideal for those wanting a quick move.
Three-bed bungalow, Tollcross
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Bungalows aren’t just for older generations, and first-time buyers can snap up this home near Glasgow with an offer over £125,000.
There are three bedrooms, one bathroom, a modern kitchen, and a lounge.
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The property comes with a private garden as well as the freehold.
Three-bed semi, Neath
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This funkily decorated property near Swansea has a kitchen/lounge area with a breakfast bar, and it can be yours for offers over £125,000.
There are two single bedrooms and one large double, plus one bathroom.
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The garden is across two levels, which may be a problem if you’ve got small children, but it has potential.
It’s a freehold property.
Four-bed semi, Port Talbot
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If you can cope with a do-er upper – and this property needs serious work – then you might want to consider this four-bed semi near Port Talbot.
Coming in at just £59,995 it has beautiful views of forest covered hills and valleys.
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There’s no chain, and the property is freehold.
Three-bed semi, Llansamlet
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There’s no chain on this three-bed semi near Swansea, which comes with three bedrooms, one bathroom, and one reception room for £120,000.
It’s got a driveway for you to park on but beware that is is a leasehold property, and the listing doesn’t detail how long is left on the lease or whether there are ground rent or management fees on top.
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So check with the agent, Purplebricks, first.
Three-bed semi, Manchester
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This three-bed semi in Gorton has two double bedrooms, one single bedroom, one bathroom and separate lounge, dining room and kitchen.
It costs £120,000, and there’s no onward chain, but it does need cosmetic work so you might need to be handy with a paintbrush.
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It’s unclear whether the property is freehold or leasehold so checking before viewing.
Three-bed end of terrace, Birmingham
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If you’re hoping to snap up this place Erdington near Birmingham it has sold subject to contract, but if the sale falls through it may end up back on the market.
It costs £125,000 and there are two double bedrooms, one single bedroom, one bathroom and two reception rooms.
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The property is freehold.
Two-bed end of terrace, Llanelli
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This end of terrace, freehold cottage in Carmarthenshire, Wales is a bargain £35,000, although the agent says it’s had an offer for £47,000 already.
It’s got two bedrooms, one bathroom, and one reception room.
But it’s in need of a lot TLC and some rooms seem to be suffering from mould and damp – even the listing warns that it needs fully renovating.
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Three-bed terrace, Birmingham
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First-time buyers can snap up this freehold property for £110,000.
It’s got three bedrooms, one bathroom and two reception rooms.
But again it needs fully renovating on the inside, so you’ll need to have the upfront cash to do this work.
Two-bed terrace, Bolton
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For £114,999 you can snap up this two-bed terrace in Bolton.
The property is freehold and has two bedrooms, two receptions rooms and one bathroom.
It’s liveable but does need work and could certainly use a lick of paint.
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For more inspiration, check out the most popular homes for first-time buyers where only a 5 per cent deposit is needed.
For more on first-time buyers, check out our My First Home series.
You might also want to see our round-up of government schemes for wannabe homeowners.
