Home Buying Alternative Routes To Home ownership For First-Time Buyers

Alternative Routes To Home ownership For First-Time Buyers

alternative routes to market

It’s a dread that many of us have either felt, or are still feeling. You look at your earnings and your savings, cross reference that with your monthly outgoings and expected future expenses, and it all seems hopeless, you’re never going to be able to afford to buy a home. 

But there is good news. There is hope. There is another way. Here’s a roundup of alternative routes to home ownership which might help make your buying dream come true, just as you thought it was out of reach.

Boost Your Credit Score

No matter how bad it seems, your credit score can be improved, thus eliminating a common obstacle for first-time buyers. While the following routes to ownership will not require you to have the financial fire power of the open market, you may still need to secure a relatively small mortgage. Your credit score is central to this. 

There are numerous ways to boost your credit score, from registering to vote and tactfully using a credit card, to ensuring that your landlord allows you to pay your rent through one of the companies who then uses your reliable payments to directly boost your credit. 

Get all of the advice and info you need in our full guide to boosting your credit score.

Help To Buy

Help To Buy is a government initiative which aims to help first-time buyers get on the property ladder with as little as a 5% deposit. It was recently announced that the scheme will be extended through to 2023.

Put simply, the government will give you an equity loan for 20% of the home’s purchase price (or 40% in London), you pay your 5% deposit, and then you cover the rest with a traditional mortgage. The equity loan is interest-free for 5 years. This scheme usually applies to new-build properties.

Read our full guide on Help To Buy.

Shared Ownership

Shared Ownership sounds like it means you’ll be sharing the price of your home with another buyer, and then living in the property with them. But it’s not that. Shared Ownership is an initiative which sees you buying a portion of a home, gaining a mortgage for that portion, and then paying rent to a housing association for the remaining portion. 

Over time, you can buy back the portion of your home owned by the housing association, eventually taking outright ownership. 

You will usually have to buy at least 25% of the home with a deposit of 5-10% of that 25%, not 5-10% of the value of the entire home. So, for a £100,000 home, the 25% you buy is valued at £25,000 and you will need a deposit of £2,500.

Check your eligibility and read our full guide to Shared Ownership.

Right To Buy

Right To Buy makes it possible for public sector tenants to purchase their home at a significant discount to market value. 

Depending on the number of years you have been renting council or public sector accommodation, you can be granted a discount of up to £84,200 (£112,300 in London) if you want to buy it. 

The discount and its associated rules vary greatly depending on the type and value of the home you wish to buy and it’s all dependent on your eligibility for the scheme. 

You can read a detailed breakdown on Right To Buy and check if you qualify in our comprehensive guide.

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