Article by Felicity Barnett, National Account Manager, The Mortgage Brain
We are in difficult times but although many experts agree on a likely slowdown in property price growth, we are still predicting a 5% increase year on year for the next 5 years.
Property is still a strong investment. Securing a longer- term fixed rate mortgage will enable you to budget with less risk.
Rents are expected to soar over the next two years due to lack of supply, high demand and new legal requirements for Energy Performance Certificate improvements which mean that landlords will need to spend money on their properties. All these factors are contributing to the highest rent payments in history at an average of £1,171 per month according to the ‘Home Lets Rental Index’.
And with energy prices expected to rise, buying an energy efficient new home will significantly improve your monthly budget. On average, a newly built property with an EPC of B rating or above will save you up to 60% on your bills. With the average household expected to be paying £4,347 per year on energy according to Cornwall Insight, a new home is a much better choice.
New research from local authorities shows that 61% of 18 to 25 year olds, and 53% of 25 to 30 year olds assume they are unable to buy. But two thirds of those interviewed, admitted to knowing nothing about the house buying process nor had they asked a lender or a broker to find out if it was even possible. Help to Buy was a huge support for First Time Buyers but it is not the only way to get on the ladder.
Consider a private equity share provider
New build specialist mortgage brokers are becoming more innovative and able to offer a wider choice of products. One solution could be with a private equity share provider like Proportunity. They offer you up to a 25% equity stake in your property, allowing you to take up to a 70% mortgage – which gives you access to much more competitive mortgage interest rates. It’s very similar to Help to Buy except you pay interest on the equity share from day one – but the sums really can work out favourably given the lower mortgage rates it offers you.
Another option is a new lender called Generation Home. They offer you the ability to have up to six people on the mortgage, helping to boost your affordability. They also allow anyone to contribute to your deposit – friends, family and employers instead of the deposit being gifted to you. They each have an equity stake and invest in your home instead of giving you the money. You also have control to pay it back, monthly or in lump sums, whatever works for you.
In summary it comes down to searching for the right advice. There are new and innovative products coming out all the time and plenty of ways to get on the property ladder, with the right support your home ownership dreams are achievable.