Getting On The Property Ladder With Little Or No Savings

tips for first time home buyersThis is a post by Leo Walsh describing how to get on the property ladder in the UK with little savings.  If you would like to contribute on Debt Roundup, please contact me.

Some would-be homeowners tend to think that getting on the property ladder with little or no savings is just a distant dream and that they may never be able to save enough to get that important foot on the first rung of the ladder.

There is no question that buying property in today’s economic climate without having a large deposit to put down, is going to be a challenge, but there are definitely ways that you might just be able to achieve what you may have though was just a pipe dream.

Here is a look at some of the potential ways that you navigate your way over the mortgage and first-time buyer hurdles and get the keys to a property that you have an equity stake in.

Shared ownership

One of the most viable options available to first-time buyers who have a limited deposit is to make use of a shared ownership scheme.

A shared ownership scheme does exactly what it says. It allows you to purchase an agreed percentage of the property which is often anywhere between 25-75% and pay a market rent for the remainder of the property value which is still owned by the developer or local authority, if they are offering the scheme.

Although you do not own all of the equity share at the beginning, it does mean that you can buy a stake in a property despite not having much in the way of savings to offer as a deposit. It also works well in that you will only need a lesser mortgage at the outset, which could be helpful if your income restricts you from getting a larger loan.

The obvious downside to this scheme is that you do not actually own your own property in its entirety at the beginning, but a lot of shared ownership schemes do tend to offer you the right to buy the remainder of the equity at some point.

You will need to check your eligibility for each particular scheme and you should also be aware that priority allocation is often given to individuals who are employed in essential services such as nursing, policing or teaching.

House builder schemes

It would be wrong to assume that all newly built properties on housing developments are going to be too expensive and out of the reach of first-time buyers.

Many national housebuilder’s are all too aware that first-time buyers often struggle to come up with the normal level of deposit required. Many will therefore have schemes and incentives in place on a number of their developments where you could potentially buy a new-build property with a very minimal upfront deposit.

Their schemes tend to differ from shared ownership and instead, they will more likely lend you the money that you need for the deposit at either a very low or zero interest rate, which can help you to qualify for a lower mortgage if you are putting a bigger deposit down.

Getting an 80% mortgage is much easier than a higher loan-to-value ratio, and these schemes often work out better for first-time buyers than trying to get an expensive 100% mortgage deal, even if you could.

Using a guarantor

Many first-time buyers have to rely on the bank of Mom and Dad to get on the property ladder and one way that parents or another family member could help, would be to act as a guarantor.

The guarantor will normally need to be able to offer security or with some schemes, deposit a sum of money that is returned at the end of an agreed term, provided that mortgage repayments have been made.

Buy at auction

There are some bargain properties still to be found via the auction route and you might be able to secure a property at a significantly lower price than similar properties on offer through estate agents.

Buying at auction is not really the best route for novice investors as there will often be work that needs to be done to the property and you need to make sure you have a mortgage amount agreed in principle so that you know how high you can bid.

Sharing the burden

Just the same as flat sharing is popular, some people choose to pool their resources and buy a property with friends or their partner.

Entering into a financial commitment with others is not something you should take lightly and if one of the party fails to make their share of the payments, the rest will have to make up the difference.

Getting on the property ladder is not easy but if you take advantage of what offers or resources are available to you, it can definitely be more than just a pipe dream.


About the Author: Leo Walsh is a property investment consultant. He enjoys finding innovative ways to add to his own property portfolio and his articles focus on strategies that require less initial outlay.


Image courtesy of Ambro /

About the Author Grayson Bell

I'm a business owner, blogger, father, and husband. I used credit cards too much and found myself in over $75,000 in debt ($50,000 in just credit cards). I paid it off, started this blog, and my financial life has changed. I now talk about fighting debt and growing wealth here. I run a WordPress support company, along with another blog, Eyes on the Dollar, which is another great personal finance blog.

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1 comment
Pauline says October 30

I like the shared ownership setup because you can buy 25% of the property with a mortgage, then instead of overpaying the mortgage and applying for one for the next 25%, you can just save up for 5% and pay it cash.

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