January 2025
Helping First Time Buyers with a higher level of mortgage affordability.
You’ve done it. You’ve put in blood sweat and tears (a sprinkle of drama to add to the readers experience) but you’ve done it. You’ve saved* that all important house deposit.
*Or.. you’re one of the lucky ones and the bank of Mum and Dad have stepped in. Good for you. I’m not bitter at all, envious maybe.
Now comes the next bit, getting a Decision in Principle* (an initial offering from a lender on how much they couldlend to you).
*Shortened to DIP. But also known as an Agreement in Principle – AIP. Same same.
Now it may be that you’re going into this purchase jointly and you both have healthy income, therefore affordability is a breeze. But this isn’t the case for a lot of people, especially single people. I like to call it ‘The Single Persons Tax’. It’s essentially a big ‘F You’ for being independent. And you’re basically told you can afford a shed at the back of a recycling centre – yay.
ENTERS THE HELPING HAND SCHEME.
What actually is the Helping Hand Scheme?
A scheme that means FTBs could borrow up to 6x their income. That’s up to 33% more than the standard, this can make a HUGE difference!
There are a few caveats, obviously (this is the financial industry after all). There’s usually a minimum income requirement, taking one lender for example – £40k for a sole applicant and £55k for joint applicants. This scheme is not always available on self-employed income. And finally, you may have less choice when it comes to the product.
But let’s focus on the positives here. If you meet the minimum requirements for the Helping Hand Scheme, here’s an idea on the impact this increase could have…
Taking a single FTB that is employed full time earning £40,000. Many lenders will cap your affordability to £180,000 and with a 10% deposit this will cap your purchase price at £200,000. However, with this scheme it could mean the loan on offer increases up to £240,000, so a 10% deposit this allows a maximum purchase price of £266,666.
The difference this price bracket makes to the properties you’ll have access to go and view will likely be substantial.
This is a fairly new scheme for some lenders so if you’re deposit ready and your affordability has been problematic in the past, then now may be a good time to review.
So what next?
If you’re thinking about buying a house, but you’re not sure where to start or you’d like help with mortgage affordability, I’d love to hear from you. Drop me an email about the Helping Hand Scheme or head over to our Instagram for our latest news and tips.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Emily Mays / Director