The Save to Buy Scheme Helping Renters Buy Homes
First time buyers have always struggled to get deposits together, and with the way the cost of living and interest rates have been recently, it’s been even harder. The renting cycle adds years to the amount of time it takes to save for a typical deposit. Fortunately, Fairview New Homes has come up with a solution to help renters get onto the property ladder.
It’s all thanks to the Save to Buy Scheme, which enables first time buyers to move into a new home with a deposit as low as 1%. A fixed monthly fee is charged for up to two years, but this all goes towards their deposit, which removes the stress and worry about rent. The scheme was launched in January this year.
Research by Fairview revealed that 79% of UK renters believe renting costs are affecting their ability to save for a deposit. In London, this figure rose to 83%. Now that this scheme is available, it should make lives easier for first time buyers.
To be able to qualify for the scheme, you need to pass the following:
Be a first time buyer
Pre-qualify by a financial advisor
You are able to move into the property once contracts have been exchanged, but you need to pre-qualify first. A month before you have saved the minimum 5% deposit, you can then apply for a mortgage and the property is yours. There are no hidden costs and no unexpected balloon payments. The payments are completely transparent so you’re aware of how much you’ll be paying each month.
The downside is that this scheme is only currently available from Fairview New Homes. The developer only builds in London and the South East, which rules out a lot of first time buyers across the UK. However, the scheme has already helped first time buyers move into homes within a matter of weeks so it’s hoped that other property developers will follow suit by offering their own versions of the scheme.
An additional scheme is available that can work in conjunction with Save to Buy. Called the Deposit Unlock Scheme, it allows you to purchase a property with a 5% deposit. The only issue is the complete lack of public awareness. Despite the government’s Help to Buy Scheme finishing, housebuilders and mortgage lenders need to find alternatives to get more first time buyers onto the ladder.
There is a danger that not all plots or properties will be eligible for either of these schemes. Only three mortgage lenders, for example, operate the Deposit Unlock Scheme, but not all developers will offer it for all of their developments. You will need to do some research first before you apply for either of these initiatives, at the very least to avoid disappointment.
Rightmove recently revealed that it is cheaper to pay a monthly mortgage for a typical first time buyer property than it is to pay rent in half of UK cities. This is still in the current market, when asking prices and high mortgage rates are rampant. Their research found that more buyers were returning to cities while renters were trying to get out.
Zoopla’s advice was to either look for a smaller property or look at buying something cheaper in a different location. With the two first time buying schemes available as outlined above, you could be in a new home of your own much sooner without the need to downsize.