By Lynne Gowers on 26th October 2017

Get on the property ladder as a contractor – information for first time buyers

Boox blog property

Getting on the property ladder as a contractor presents specific challenges. Typically, high-street lenders can be wary of anyone who falls outside of their usual script, and often banks and building societies are simply not familiar with how contractors work and are remunerated.

However don’t be disheartened. There are ways and means of buying a home as a contractor. We have pulled out just a few of the options you might want to consider further.

Help to Buy ISA

The Help to Buy ISA is a government scheme aimed at those saving to own their first home.
It is available from a number of banks, building societies and credit unions.
For every £200 you save in your Help to Buy ISA account, the government will boost your savings by 25% when you come to buy a property.
You will need to save at least £1,600 before you claim the minimum bonus of £400. The maximum government bonus is £3,000 but this is per first-time buyer, not household. Therefore if you are planning to buy a home with your partner you could receive up to £6,000 towards your first home.

Find out more about the Help to Buy ISA here

Shared ownership

If you can’t stretch to the mortgage on 100% of a property, the government’s Shared Ownership scheme works by providing the chance to buy a 25% – 75% share, and pay rent on the remaining share.
You can buy a bigger share of your home at a later date as and when you can afford to.

100% mortgages

After the financial crisis of 2007, the 100% mortgage was very much resigned to the past. However, Barclays have resurrected it, albeit with some strings attached.
Their “Family Springboard” mortgage works by having a “helper”, usually the buyer’s parents, putting down 10% of the value of the property as a guarantee. This is held in a savings account linked to the mortgage.
So long as the borrower keeps up with repayments, the 10% guarantee amount is returned to the “helper” with interest after 3 years, rather than remaining tied up in the property.

Find out about the Barclays Family Springboard mortgage here

UK Housing Market changes*

As a first time buyer, it is prudent to consider your options in the context of the wider housing market.

Figures released by the government last week showed that house prices show an annual rise of 5%, taking the average cost of a home in the UK to £225,996.

Prices up in England & Wales…

Last week’s report shows that England has seen an annual price increase of 5.3%, taking the average property value to £243,520.

Regionally the North West experienced the greatest increase over the last 12 months, with property prices up by 6.5%.

…but London prices slow down

The figures show that London saw the lowest annual increase of 2.6%, taking the average property value in the capital to £484,362.
This, coupled with the 3% inflation figure, shows that prices in London are falling in real terms.

Speak to the experts – introducing Marketplace

As we touched on previously, there is a widespread lack of knowledge and understanding from traditional financial institutions when you approach them as a contractor.
Mortgages are just one of the areas where off-the-shelf financial products and services may not be the right fit.

Marketplace is a new platform where contractors, freelancers and independent professionals can browse a range of financial products, services and free business resources specifically designed for them, including specialist mortgages from our partners at CMME .
Just click on the link below to have a look around.

Marketplace

 

*All data from the UK House Price Index for August 2017

Lynne Gowers Written by Lynne Gowers

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