With rent prices skyrocketing to the highest rates seen this decade, it’s no surprise that many around the country will be crunching the numbers to find out whether they can afford to buy their own home.

Buying a home has clear fiscal benefits – Halifax’s latest owning vs renting review found out that homeowners are on average £500 better off annually than renters. However, for many young homeowners, setting foot on the ladder can be a daunting task. Navigating the housing market for the first time, saving for a deposit and securing a mortgage can all feel overwhelming, but with the right advice, it can pay dividends.

Tzana Webster, Director of Property Sales at Watermans, Edinburgh property valuation experts, explore the different options available to first-time buyers to take some of the pressure off when securing your first home.

100% Mortgages
One recent development taking the market by storm is the arrival of the no deposit mortgage. This allows buyers to put pen-to-paper without having to save for years provided they meet the following criteria:

  1. Each applicant is a first-time buyer and has never owned a property.
  2. The applicant is aged 21 or over.
  3. No missed payments on debit/credit card commitments.
  4. You have proof of 12 months’ rent payment during the last 18 months.
  5. Proof of paying all household bills for 12 months during the last 18 months.
  6. You’re not looking to buy a property in Northern Ireland.
  7. You’re not looking to buy a new build flat.
  8. As ever, it’s wise to speak to an independent financial adviser to assess whether you qualify for this mortgage product.

Consider a Government scheme
One of the first steps for aspiring homeowners should be to explore the government schemes designed to assist first-time buyers. Housing policy can be directly linked to economic growth so it’s therefore in the government’s interest for first-time buyers to set foot on the ladder.

After the cessation of the Help to Buy (Scotland) and the First Home Fund, the best option remaining to buyers is the Low-cost Initiative for First Time buyers (LIFT) equity scheme. This is particularly aimed at those on low to moderate incomes living in Scotland and allows you to buy a home without having to fund its full cost with help from the Scottish government. Under this scheme, you’ll likely pay between 60% and 90% of the purchase price.

For instance, should you pay 75% of the fee, the Scottish government will pay the other 25% of the purchase price and will hold the remaining share under a ‘shared equity agreement’ they will enter with you. Each area in Scotland tends to have its own criteria meaning a property in Midlothian may vary from a prospective buyer in East Lothian.

Typically, homeowners will have the same responsibilities as any other mortgage owner – including utility bills, repairs and maintenance and council tax – however, the Scottish government will get a share of the money should you decide to sell.

Shared ownership
Another option to consider could be shared ownership.

It’s important to note that the scheme differs from the aforementioned shared equity scheme. In shared equity, you own the home outright, whereas in shared ownership, a housing association still owns part of a home while charging you a fee to live in it.
This means you can buy 25%, 50% or 75% of a home while the remainder will be owned by the association. At any time, the property buyer could apply to the housing association to purchase more equity shares in the property – so if you originally bought a 50% share of the property, you can apply to purchase another 25%.

You would then own a 75% equity share of the property and the housing association would only own a 25% share. This would make your rental payments to the housing association lower and eventually; you could ask if you can purchase the full 100% share from them. For those interested in shared ownership, details are available from participating social landlords in your area.

Again, first-time buyers with limited housing alternatives will assume priority in addition to members of the armed forces and disabled people.

The guarantor mortgage
For first-time buyers, it may be especially useful to shop around for a new build property. Some cities, regions or homebuilders may offer initiatives specifically tailored to help first-time buyers.

While builders arguably aren’t offering as good incentives to first-time buyers as previously, one option to consider for this is a guarantor mortgage. This type of mortgage typically involves a family member acting as a guarantor for the loan. Guarantors will offer their own savings as security, meaning first-time buyers can secure a mortgage with a lower deposit or more favourable terms.

These can be a lifeline for those with limited savings or a lower credit rating.

Researching and taking advantage of these local schemes can provide valuable opportunities for aspiring homeowners.

Alternative suggestions
Another option could be to look at properties that have been on the market for a while (at least 3+ months) for which there isn’t much competition and likely just need a little TLC. These are the types of properties that a new buyer could get a good deal on and really all that would be needed would be a lick of paint or new flooring/ carpet to freshen the property up.

Often buyers just don’t have the vision to see beyond the magnolia-coloured walls or the worn-out carpets to see the potential that the home really could have with a fresh coat of paint and a little bit of love.

Buyers could also consider ‘Fixed Price’ properties. The price qualifier “Fixed Price” is used by sellers/ agents to give prospective purchasers absolute clarity as to the sale price that a seller is looking for.

This can be really helpful to buyers to identify exactly what they would need to pay to get a property and avoids the potentially expensive ‘guesswork’ of property negotiations.