With mortgage lenders reigning in their lending and moving the goal posts it is now much more difficult to obtain a mortgage as deposits needed are more than many can afford. The higher deposits and the tougher credit approval checks are stopping many for buying their first home. However there is a way to get around this hurdle and that is going down the shared home ownership path.
To avoid the need for a deposit or to get a better deal on a mortgage you could go down the road of asking a parent or close family member to take an equity stake in the property which will reduce the risk to the lender since they will have another person liable for the property. It benefits the buyer with better mortgage deals and choice often resulting in you paying less than if you could only afford one of the lower deposit mortgages meaning poor rates.
Normally the equity split would be 90 per cent for the buyer and 10 per cent for the family member, although in these economic times it will likely be a lower percentage for the buyer. You may be in the fortunate position to have a parent who owns their own home and is able to invest more in the property for you; parents always want to help their children so I’m sure they will help as much as possible.
If the family equity loan isn’t an option for you, there is another
shared home ownership option in the form of government schemes, here in Scotland it is the Low Cost Initiative for First-Time Buyers (LIFT). If you are classed in the low to moderate income bracket then the government may be able to assist you with putting up a proportion of the equity needed to buy a home. This may be a better option even if family help is available as you can borrow up to forty per cent normally with more available in exceptional circumstances. Of course increases in home values would benefit your family member.
Investigate both options and decide on which is best for you, good luck.
