The £120K homes first-time buyers can afford WITHOUT putting down a deposit
Average earners can borrow up to four and a half times their pay packet for a home
HOME buyers can now get a foot on the housing ladder without a deposit thanks to a new mortgage deal that allows you to borrow 100 per cent of the property's value.
Normally banks require you to put down a deposit of at least 5 per cent when buying a home and they will provide a mortgage of up to 95 per cent to cover the remaining cost.
But the new Family Link mortgage from Post Office allows your parents or other close relatives to use the value tied up in their own homes to help you borrow 100 per cent of the price of a new property.
If you are earning the average UK salary of £26,000 this means you could potentially buy a home worth up to £120,000, as mortgage lenders tend to set their maximum loan size at 4.5 times your income.
So we've put together a selection of the properties on the market right now that could be within your budget.
How the Post Office no-deposit mortgage works
YOU won't need to borrow money from the Bank of Mum and Dad but you'll still need the support of your parents
- First-time buyers take out a 90 per cent loan to value mortgage, with the 10 per cent deposit secured against mum and dad's home - as long as they're already mortgage free.
- Rates start at 4.89 per cent for a five-year fixed deal.
- Buyers will then make two separate repayments for the first five years of the deal - their own mortgage payments and one towards the "assistor's mortgage" which is interest free.
- For example, if you took out a mortgage worth £121,500 over 30 years at 4.89 per cent, your monthly repayments for the first five years would be £644 a month, including the deposit loan.
- Once the loan is paid off after five years, your payment will drop to £619 a month - a reduction of £25.
- But be warned - if you do fall behind on your repayments both you and your family's home could be at risk of repossession.
- Another risk is that your property falls in value. This could leave you in negative equity, which is where the size of your outstanding mortgage debt is greater than the amount your home is worth.
Three-bed terrace cottage, Stockton-on-Tees
You can pick up this pretty three-bedroom terraced cottage in .
But you'll need to be willing to put some work in as it is something of a blank canvas on the inside.
The walls are bright and fresh, but make sure there's room in your budget for some new carpets
Two-bed semi, Durham
This tasteful nine miles away from Durham in Spennymoor.
It is one of the homes available on the Burton Woods development, which is set in Whitworth Park, a haven for wildlife.
You'll be able to enjoy your breakfast from the open-plan kitchen that has french doors overlooking the garden.
Other lenders offering 100 per cent mortgages with family help
THERE are a few other mortgage lenders that will allow you to borrow 100 per cent of your home's value but you will need family support.
- The Barclays Springboard mortgage allows you to borrow the whole value of the property, but your family must put 10 per cent of the cost of the home in a savings account with the bank. So long as you keep up all your payments the bank will give your parents their money back after three years with interest. But if you miss payments their money is at risk. Rates start from 2.75 per cent.
- Aldermore has a Family Guarantee Mortgage which allows you to borrow 100 per cent of the value of your new home, but the lender will use your parents' property to guarantee 25 per cent of the loan amount. It means that their home is at risk if you fail to keep up with payments.
- Other small building societies like The Tipton and Loughborough have options which work in a similar way, using familiy assets instead of the need for a first-time buyer deposit.
Three-bed detached house, Northumberland
This could also be yours for £120,000.
It has plenty of space for children to run around outside with a good sized garden, making it an ideal home for a young family.
Two-bed end of terrace, Birkenhead
You can pick up a for just £112,500.
This home is called the Pendleton and it is part of the Lovell Homes development Minshull Way, which has a selection of two and three-bedroom homes.
You'll be able to add your own personal touches when choosing how to furnish your home, but the developers have included a showroom photograph so that you can see how a typical bedroom in a Pendleton home would look.
Three-bed terrace house, Isle of Wight
In also comes with a £120,000 price tag.
It's cosy and the interior could do with a refresh, but you'll be within walking distance of the sea front.
Two-bed flat, Roborough
In Plymouth located in Roborough, five miles north of the city centre.
The current owners have kept the interior neutral so you could easily add your personal style and make this house feel like home.
How to get help buying a house
THERE are several government schemes available to help you get on the housing ladder.
- Help to Buy loan: This scheme is for those who have a 5 per cent deposit, and is only available on new-build properties that are worth less than £600,000. The government lends you up to 20 per cent of the property value (interest-free for the first five years) which gives you access to cheaper mortgages. You will need to pay this back at the end of the mortgage or when you sell.
- Starter Homes: First-time buyers under the age of 40 can access this new scheme. You’ll get a 20 per cent discount on the market value of the property (new-build only) but you cannot sell or let the property for five years after you buy it.
- Shared ownership: This scheme is available to non-homeowners who earn £80,000 a year or less (£90,000 in London). People can buy a share of a home from a housing association and continue to rent the remainder. Buyers will need a ten per cent deposit as well as money to cover stamp duty and other fees. You’ll also need to find a mortgage lender that is willing to lend on shared ownership properties.
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