How will I ever be able to afford to buy when rates are so high?
November 1st, 2022
This is a common question asked of us in this current economic climate. Interest rates are soaring and property prices do not seem to be levelling off so it’s understandable why people are wondering how they will ever be able to buy a property.
The end of the Help to Buy mortgage scheme is also another option closing at the end of this month which was useful scheme helping those looking to get on the housing ladder.
However, there has always been Shared Ownership mortgages where you can buy a share in a property to suit your budget and pay rent on the remainder.
Normally these properties are purchased through a housing association and can be brand new or resale. The minimum percentage that can be purchased is 25% and the remaining 75% will remain with the housing association and rent paid on that portion. However, a larger proportion can be purchased initially or even throughout the term of the mortgage and this is called staircasing.
The other benefit of this scheme is that if purchasing a lower percentage of the overall value of the property the deposit can be low too.
For example, if a property was valued at £250,000 and a client wanted to buy a 25% share (£62,500) the deposit would potentially only be £3125. Obviously there is the rent to factor in too but this is normally slightly lower than a conventional market rate.
Interest rates for these types of mortgage are standard too so whilst being a slightly different mortgage proposition it doesn’t mean that rates are hiked as a result.
So, where to find a property like this? Searching new build developments (look under affordable housing) or going on to housing association websites is a good place to start.
However, like all mortgage types it is good practice to seek the advice of a mortgage broker and that is where Compass Mortgages come in.
If you’d like to discuss this area or any type of mortgage advice we are here to help.
As our strapline states Compass Mortgages are here to “Point You in the Right Direction”.
Call 01903 815444 to speak with one of our friendly Advisers.
The end of the Help to Buy mortgage scheme is also another option closing at the end of this month which was useful scheme helping those looking to get on the housing ladder.
However, there has always been Shared Ownership mortgages where you can buy a share in a property to suit your budget and pay rent on the remainder.
Normally these properties are purchased through a housing association and can be brand new or resale. The minimum percentage that can be purchased is 25% and the remaining 75% will remain with the housing association and rent paid on that portion. However, a larger proportion can be purchased initially or even throughout the term of the mortgage and this is called staircasing.
The other benefit of this scheme is that if purchasing a lower percentage of the overall value of the property the deposit can be low too.
For example, if a property was valued at £250,000 and a client wanted to buy a 25% share (£62,500) the deposit would potentially only be £3125. Obviously there is the rent to factor in too but this is normally slightly lower than a conventional market rate.
Interest rates for these types of mortgage are standard too so whilst being a slightly different mortgage proposition it doesn’t mean that rates are hiked as a result.
So, where to find a property like this? Searching new build developments (look under affordable housing) or going on to housing association websites is a good place to start.
However, like all mortgage types it is good practice to seek the advice of a mortgage broker and that is where Compass Mortgages come in.
If you’d like to discuss this area or any type of mortgage advice we are here to help.
As our strapline states Compass Mortgages are here to “Point You in the Right Direction”.
Call 01903 815444 to speak with one of our friendly Advisers.
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