purchasing a house through co-ownership conveyancing law

How to get a deposit for a first home

Some hints and tips to inspire first time buyers

Ask any aspiring first time buyer what the biggest hurdle to buying their starter home is and they will tell you it is saving up for the deposit. The average deposit need for a first-time buyer house in Northern Ireland is an eye-watering £30,435. With property prices on the increase it may seem like the dream of owning your first home is moving ever increasingly out of reach. Helpfully we have decided to provide you with some tips that may help make that dream a reality.

Move back in with the parents

Housing rents are far in excess of monthly mortgage repayments right now. Every pound you give to your landlord is a pound less saved towards your deposit. It makes perfect sense then to move back home and put what you would have spent on rent into the bank at the end of each month. The average rent here is £629 per month. Over the course of a year that is a not inconsiderable sum of £7,548. In addition you may be able to save on food, utilities, etc.

The Bank of Mum and Dad

Yes this is only available to the privileged and is unfair on those more disadvantaged but the majority of first time buyers are getting gifts to help with the deposit. Your lender will require your parents to sign a gift waiver, often with independent legal advice. One thing to be wary about, if your parents die within seven years of making the gift to you its value may still be counted towards the inheritance tax liability.

Move somewhere else

If you don’t mind a bit of a commute to work you will find that the property values vary wildly in Northern Ireland, as they say, “location, location, location”. Moving from Belfast into the commuter belt or from one county to another can get you similar properties at a fraction of the cost. This will help knock a big chunk off of your deposit.

Get a Help to Buy ISA

Don’t just save, get the government’s help. If you open up one of these ISAs (available at almost all of the high street banks) the government will boost your savings by 25%. The maximum bonus you can get is £3,000 per saver. So if you and your partner are purchasing together you could conceivable get a bonus of £6,000 between you. There is a lot of small print so make sure you take time to apprise yourself of the terms before getting involved.

Buy with Northern Ireland Co-Ownership Housing

This is a not for profit organisation with the sole purpose of making housing more affordable. In very broad terms you buy between 50% and 90% of the home you want and they buy the remaining share. You pay rent on the share that you do not own. You can then buy more shares in your property as the years go by. What this does is vastly decrease the size of the deposit you need (by up to 50%) so it is not to be sniffed at.

If you would like advice in relation to any issue regarding the purchase of a first home please give us a call on 02891 817715 or contact our property team by email at property@boydricesolicitors.com.

New Belfast Office

We are delighted to announce the opening of our new premises in Belfast

Due to continued expansion of the business we have decided to open a base in Belfast. We strive to put our clients first and the new, convenient office demonstrates how important their needs are to us.

Our new office can be found at Adelaide House, Hawthorne Business Centre, Falcon Road, Belfast BT12 6SJ. Please make an appointment in advance.

Our Belfast office contact number is 02890 387060.

Re-mortgage your house

Reap the Rewards by Overpaying on your Mortgage

Here’s how to save ten of thousands on your home loan and become mortgage-free years early

Have you ever considered overpaying on your mortgage? If not, there’s two major reasons why you should start giving it serious thought right now. The first is that savings rates are still extremely poor. You’ll be hard pressed to find a safe investment where you can get a decent return. Overpaying on your mortgage will save you tens of thousands, guaranteed. The second is that interest rates are expected to continue to increase over the coming years – increasing repayments. Overpaying will reduce the total you begrudgingly give over to the bank and end your indebtedness years in advance.

Monthly Overpayments or Lump Sum Overpayments?

You can make a lump sum overpayment which will have an immediate effect on the remaining length of your mortgage. For obvious reasons this option is not available to most but those who have come into an inheritance or sold an asset can save enormous amounts of money.

An alternative option is to repay slightly more than required each month on your mortgage. Money Saving Expert have a useful calculator to help you determine how much you can save by regularly overpaying each month. Say, for instance, you have £150,000 left on your mortgage, 25 years to go and an interest rate currently at 4.5%. By paying just £100 per month extra you would save £20,010 in interest repayments and pay off the mortgage nearly four and a half years earlier.

Check the fine print

In you are in a fixed rate period, or an introductory offer then a lot of lenders may only allow you to pay up to 10% of your mortgage balance as an overpayment each year. You really need to check the fine print on your terms and conditions as you don’t want to be liable for penalty fees. These can typically be between 1% and 5% of the overpayment made. Again, you’ll need to check the fine print to check what the exact penalties are.

If you are on a standard variable rate then the vast majority of lenders won’t have any restrictions on the level of overpayments you make. Keep in mind standard variable rates are more expensive so you might be better off getting a re-mortgage and fixing your rate.

Overpayments and Re-mortgages

If you have been overpaying your mortgage consistently and then you go to re-mortgage you may find you get a far better deal than you expected. The reason for this is the deal your lender will give you will depend on your loan-to-value ratio (LTV). This measures the size of the outstanding mortgage compared with the market value of your property. If you purchase a property with a 10% deposit then your LTV is 90%. As you pay off your mortgage your LTV will drop. If you’re overpaying on your mortgage it will drop at an increased rate. Then you can get an even better deal on your re-mortgage.

Make sure you have a contingency fund

It is all well and good making overpayments on your mortgage but what if you were unexpectedly made redundant or you needed to spend significant money on something that you did not anticipate. You would still be obligated to make your mortgage repayments in full each month (although some mortgages allow you to underpay if you have built up some credit). Therefore you should really have some funds saved for emergencies before you start overpaying your mortgage.

If you would like advice in relation to any issues regarding remortgaging your property please give us a call on 02891 817715 or contact our property team by email at property@boydricesolicitors.com.