04 Jul 2022
Ways to Buy a Property For Less
With house prices on a steady rise it may feel like owning a property is slipping further and further out of reach, but there are some ways to purchase a cheaper property. It may however mean you’ll have to make certain compromises or meet certain requirements. Here are some ways you could buy a property for less.
Buy a Fixer Upper
A house that needs maintenance work will generally be cheaper by thousands, if not tens of thousands. Though it might not be your “dream home”, going for a property like this might be more achievable. You can then do work yourself on it, if you have the skills and patience, or you can hire a professional – if you have the money. By purchasing a home that needs a lot of work done for less, you might have some savings leftover to get professional traders in, so keep this in mind.
The house that you purchase could range from any amount of work needed, from one or two big tasks like a new bathroom needed, to a derelict property. You could even sell it for profit after, flipping houses is a popular concept and there are various TV shows about it, though it can be risky and not always go as well as you’d hoped. Always do some additional research such as looking into the value of other properties in the area.
Help You Can Get
There are a few options available right now to make getting on the property ladder a bit easier for you, especially if you’re a first-time buyer. The two options are as follows…
95% Mortgages Scheme
The current 95% mortgage scheme is a way for people to buy a house with a smaller deposit, though with higher monthly payments and interest the overall price of the property may end up higher than it would be with a bigger deposit. Still, it’s a valid option available to help you buy a home.
The scheme is intended as a temporary measure in response to the COVID-19 pandemic causing a reduction in high loan to value (LTV) mortgages, with the government encouraging lenders to offer 95% mortgages again. The scheme is currently planned to run until December 2022 but will be reviewed closer towards this end date to see if an extension is necessary.
First Homes Scheme
This option is obviously dependent on if you qualify for the scheme, but is a great option to look into.
The scheme is only available in England and could help you buy a home for between 30% to 50% less than its market value.
To be eligible you need to be:
- 18 or older
- A first-time buyer
- Have a total household income that is below £80,000 (or £90,000 if you live in London)
There may also be extra eligibility conditions or priority for the scheme set by local councils, such as prioritising essential workers, people who already live in the area, are in the armed forces/a veteran or on lower incomes.
To apply, you need to look for a new build home that is advertised as part of the First Homes scheme by the developer. You’ll then need to contact them and complete an application to send to the local council. There will be a fee to pay, with the amount being set by the developer.
You can also buy a home from someone else who originally bought the home as part of the scheme. The home cannot cost more than £250,000 (or £420,000 in London) after the 30% to 50% discount has been applied. For more information, visit the Gov.uk website.
Buy A Smaller House
It might sound obvious, but compromising and searching for a smaller property will generally mean a lower buying price. This is not always the case however, as small properties in locations like London will be more expensive than large properties in quieter areas.
If buying a smaller house sounds like something you would actually consider, then think about what you really need compared to what you think you would need in a bigger home. If you can make those sacrifices and utilise a smaller, functional space, then it’s definitely worth doing rather than a big house with big debt.
Buy an Old Fashioned Property
It might not be the super modern home you dream of but it’s still a way to get a property you own. Some older house styles like Victorian or Georgian will stay popular and sell for a good amount, but looking for a house from the 60’s or 70’s could be the way to saving money.
Be aware that if you bought it for cheap, you may also sell it for cheaper as whilst the value may go up slightly it won’t rise as much as more modern properties in the area. If you plan on staying in the property for a long time this will be fine, but if you are buying the house as a step on the property ladder it could lead to issues in the future.
You could always spend the time you live there slowly modernising and improving the place, especially with the money you saved buying the house for a lower price. You could also buy an older house in an area that is slowly going up in value or being gentrified, this will require you to research the area.
A mortgage may be harder to get on an old home because they were built differently to the construction standards of today, and that may affect or limit what lenders can offer. As always though, it’s best to speak to an online mortgage advisor to see what solution can be found.
Advice On Buying a Property
Whichever way you choose to get on the property ladder, saving up to buy a house takes time, so don’t be disheartened. You can speak to a member of our team by calling 03300 58 60 58 or emailing us at ask@mortgages.online. You can also start the process right away with our online form, we’ll be able to help you find the right mortgage for your circumstances.
