Readers put their property questions to our guest panel of experts:
solicitors, mortgage advisers, property gurus and shared ownership providers.
Government plans
I’m a Londoner born and bred, looking to buy my first home in the capital. However, I’m struggling to save for the eye-watering deposit needed to buy on the open market here. I’ve heard that the Government is aiming to support developers to build 1.5 million more homes—will this make it easier for me to buy my first home in London?
Mark Beam, Finchley
For many first time buyers, owning a home in London can feel like an increasingly distant dream, especially with the rising cost of living and mortgage rates higher than they were a few years ago.
You’re right that the Labour Government has pledged to support housebuilders in delivering more homes. Proposed reforms to the UK’s planning system could speed up construction and increase the supply of new homes. While this is a step in the right direction, so far, there has been little focus on schemes designed specifically to help first time buyers – such as shared ownership.
With mortgage rates climbing and house prices remaining high, shared ownership offers a practical and affordable route on to the property ladder. The scheme allows you to buy a share of a property –typically between 25% and 75% – with the option to purchase more over time as your financial situation changes. Since you only need a mortgage for the share you’re buying, your deposit and monthly repayments can be lower than they would be buying on the open market. Plus, deposits are usually more manageable, from as little as 10% of the share you are buying, making homeownership accessible to more people.
The good news? Shared ownership homes are already available across London, provided by some of the UK’s most trusted housing associations. Take Dace House at Beaufort Park in Colindale, north west London—a stylish collection of one and two bedroom apartments, offering high-quality homes with the added benefit of outdoor space.
If homeownership in London feels out of reach, Mark, it’s worth exploring shared ownership as a stepping stone to owning your own place in the capital.
Simon Scott
Mortgage rates
I am a first time buyer and starting on my journey to homeownership. I am a little confused though as to why longer term fixed-rates or lower loan-to-value mortgages have better rates?
Tim Stratton, Wandsworth
Longer term fixed-rates are often lower because they provide more stability and less risk for both lenders and borrowers. When you opt for longer fixed-rate terms, such as five or 10 years, the lender has a guaranteed income stream for a longer period, which reduces their risk. This reduced risk allows lenders to offer lower interest rates.
Additionally, longer term fixed-rates provide borrowers with peace of mind by locking in a consistent interest rate for an extended period. This can be especially beneficial in times of economic uncertainty or when interest rates are expected to rise. This could mean paying a slightly lower or higher interest rate at the time of application to secure this stability and avoid potential future rate increase. Many fixed-rates have product fees to secure the rate and usually have a charge if you repay the loan before the end of the term, or where you make additional overpayments that exceed the limit the mortgage product allows.
When it comes to mortgage rates and larger deposits, lenders consider this as a lower risk because you are borrowing a smaller portion of the property’s value, resulting in a lower loan-to-value (LTV) ratio.
Furthermore, a larger deposit may also indicate financial stability and a lower likelihood of defaulting on the mortgage. Lenders typically reward borrowers with stronger financial profiles by offering them more favourable interest rates.
A longer fixed-term may not be the right choice for everyone, there are various mortgage product available including tracker and variable rate discount products. Equally, having a smaller deposit doesn’t mean that you won’t be able to get a mortgage. There are many mortgage products available across a range of lenders which can accommodate most client profiles. To ensure you find the correct mortgage product for you, it is best undertaken using a professional mortgage broker like Censeo which has access to most lenders, including those not on the high street and some that offer exclusive mortgage products through mortgage brokers. Our qualified and experienced mortgage advisers will provide advice to borrowers on the most suitable product for the personal situation and goals, often saving you time and money. More information can be found at censeo-financial.com.
Rupi Hunjan
Allocation of homes
I am struggling to find a home in my preferred location and seem to miss out at the point the housing association allocates the homes that I have listed as my preference.
Sonia Bartlett, Hendon
The allocation of shared ownership homes is something that has never felt very sexy to me and from a commercial point of view can be a bit frustrating as it can cause delays and ultimately I would think most sales team want to sell new homes within agreed time frames to ensure the development performs well. Until 2016 there were priority groups in place which providers worked within but these were removed, making shared ownership properties available on a first come first served basis for any applicant who met the necessary eligibility and affordability criteria, with the only priority being those who work for the Armed Forces.
So why are you not being offered the home you chose, I hear you scream!!!
As mentioned above there are still eligibility criteria to meet and I have listed these:
- Age requirement. Applicants must be 18 years and older
- First time buyer or non-homeowner. You cannot own another home, not in the UK or overseas, and if you do you must be in the process of selling it
- Income thresholds. Annual income must not exceed £80,000 outside London and £90,000 in London
- Inability to purchase outright. You should not be able to afford to buy a home suitable for your housing needs on the open market
- Local eligibility requirements Payment history.
- Are you up to date on rent/mortgage payments?
- Financial standing.
And another thing…
Shared ownership is a Government-backed scheme and as such while the priority groups on the whole have been removed, most providers will still have their own internal allocation policy in place to ensure where there is under supply of shared ownership that homes go to those in most need. For example, family homes are offered to those with a need for a larger home. In some cases there will be obligations under Section 106, which is an agreement between the registered provider/developer and local council, and could stipulate priority or a period of exclusivity to local people or those with a local connection. This ensures homes are made initially made available to those living locally and the registered provider will need to demonstrate engagement with this group during the agreed time. At Thrive’s Codicote development we are working with Codicote Village Day and with local shops and restaurants to promote shared ownership six months before completion of the homes to fulfil our Section 106 commitment to the local community and North Hertfordshire District Council.
Taking the above into consideration, keep an open mind, make sure what you want is realistic and be ready to compromise and perhaps look at schemes which have been on the market for a while where allocations may have relaxed due to satisfaction of local demand. Also speak with on-site sales teams to look at any suitable opportunities they might have for you.
Steven Midgley
thrivehomes.org.uk
First Time Buyer is an exciting bi-monthly glossy which takes a stylish and comprehensive look at all the options available, setting them out in an entertaining and informative way, and helping potential customers navigate their way through what is often a daunting and complex process. We dispel the myths, reinforce the facts and arm the reader with the tools necessary to make their homeownership dreams a reality.
