It is usually everyone’s dream to own a home, and you don’t need to be a millionaire to have one. In the UK financing, your home can be confusing due to the many options available. There is both nervousness and excitement before the purchase decision is made.
Personal deposits
There are many ways to start working towards the deposit requirement, such as freelancing, you do not necessarily need to hit the bare deposit minimum requirement. By having the minimum deposit, you are the mercy of lenders, and one needs to work extra hard to surpass the minimum deposit requirement. A big deposit amount means you will be offered a good rate with better fiscal terms. It would help if you did not aim for a 5% deposit think outside the box and set a goal of 30% or 40%.
Mortgage products
In the UK, there is a mortgage for almost every property you can imagine from the first buyer mortgage, a farm loan, or a creative solution to enable you to buy with your friends. In the UK, you can either approach the bank directly or use a mortgage broker. The latter is convenient since the bank will not give you many options, whereas a broker will search the whole of the market and give you a variety of options or rather find you the best deal.
Government Schemes
The UK government is very helpful to first buyers of new homes, and it has a Help To Buy that is available in the entire UK. The UK government will give you a 20% deposit if you have a 5% deposit interest-free. From the government loan, you will now have a 25% deposit and get a better mortgage deal. There is no need for stamp duty, and this will save you thousands and help finance your home.
Guarantor Mortgages
Deposits and salaries are never enough to cover the mortgage. Through guarantors, you might be able to convince a friend or close family member to guarantee you and promise to pay up even though the guarantor mortgage is not for everyone. If you have a less perfect credit history, you can go for a guarantor mortgage. The mortgage rate might be higher, meaning you will end up paying more, and if you miss a payment, your relationship with your guarantor might be strained.
Bank loans
There are many banks in the UK providing loans for housing development and specialist construction loans, a short-term funding solution given by banks, also known as self-build for both small and large house projects. You will only pay the interest incurred until the loan is complete, this is the same as a buy to let mortgage which is riskier than a standard mortgage, and it requires deposit with 25% being the minimum deposit.
Conclusion
Regardless of the source of financing you choose, it is important to start the process early. With proper planning, and by the time you go looking for estates and agents, you have the finances and armed with Agreement in Principle document that will put you in a better position as estates agents take you seriously.
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