Information correct at the time of publication - Offers, products and services may no longer be available.
Property values have nose-dived in recent times and are only just beginning to show signs that the market is stabilising. While you would expect the house price plummet to make it easier for key workers to set foot on the property ladder, the concurrent crisis in the financial world has lead to a reduction in the availability of mortgages. First time buyers currently need a deposit of at least 15% of the value of a property to secure a mortgage and the best deals on offer require an even bigger down payment. A squeaky clean credit history is highly desirable, too.
So, what are the options? Well, the average property price in England and Wales was around £178,000 in July this year according to the Land Registry. Achieving a mortgage offer for such a purchase price means finding at least £26,700 – no easy task for someone in the early stages of a teaching career. You might have a family member able - and willing - to help fund the deposit, and most lenders are happy to consider a guarantor plan, too, whereby a relative could guarantee all or part of the loan.
If that's a non-starter, you could consider buying a home with a group of friends and sharing not only the funding of the deposit but the monthly mortgage payments and maintenance costs, too.
But if sharing a home isn't for you, have you considered sharing the ownership? Buying a home outright may be out of reach, but shared ownership schemes can take you onto the property ladder without stretching the finances.
With a shared ownership scheme, you can purchase a share of a property while another party - usually a housing association - owns the remaining share. The minimum share you can purchase is 25%, and 75% is the usual maximum. You will need to be able raise a mortgage for the share you want to purchase, and you will pay rent on the share you don't own. Rents are calculated to be affordable. As you become able to afford it, you can buy additional shares until you own 100%.
Introduced to help key workers purchase property in areas of peak prices, the key worker living programme still offers hope to teachers living in London, the South East and East of England. The programme offers two kinds of help: a shared ownership scheme and intermediate renting. The shared ownership scheme is New Build Homebuy and all of the properties available are newly built. Please note that funding for the MyChoice Homebuy scheme, which gave eligible candidates the option to purchase a property on the open market but under a shared ownership arrangement, has already run out and there are no plans to reallocate funds in 2010. With intermediate renting, the level of rent is lower than that charged by private landlords and properties are let through housing associations. It's also worth mentioning Social Homebuy, which gives housing association and local authority tenants the right to buy their current home at a discount.
Buyers have until 31st December this year to take advantage of the temporary raising of the stamp duty threshold, so if you’re in a position to purchase a property with a value between £125,000 and £175,000, you may want to act fast. From 1st January 2010, properties in that bracket will once again be subject to 1% stamp duty. Properties worth less than £125,000 will remain exempt.
Teachers Building Society was founded to help teachers onto the property ladder and welcomes applications from teachers on the NewBuild Homebuy scheme, in a group of up to 4 people or with a guarantor.
For more information, call our mortgage consultancy team on 0800 378 669 For the latest information about the Key Worker Living ProgrammeBookmark With:
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