How to get on the property ladder with little or no deposit

If you're a first time buyer getting a foot on the property ladder is very tricky. The banks demand high deposits before even considering lending to anyone seeking a mortgage. However there are other ways to buy and own your first your home if you have little or no deposit…

1.       Shared ownership schemes

A shared ownership (or shared equity) scheme allows you to purchase part of a property (usually between 25%-75%) and rent the rest from a local authority or a housing developer.

2.       New build home deals

Some construction companies will offer to lend you the money you need for a deposit (often interest free) so that you need to borrow a lesser amount as a mortgage.

For example the housing developer may lend you 20% of the property value and ask to be repaid in 15 years. You would then only need to apply for an 80% mortgage and these are far easier to come by, and far more affordable than the 100% mortgage deal you'd need if you had no deposit.

3.       A guarantor mortgage

There are some first time buyer mortgages which allow someone (usually a parent) to act as a guarantor on your behalf.

Typically these mortgages will require your guarantor to provide a guarantee that your mortgage repayments will be met on time - this may mean making the payments themselves if you are unable to do so.

4.       Buy at auction

You could get a property at auction for significantly less than if you bought via your local estate agent.

Although you still need a mortgage and deposit to buy an auction property, if you are struggling to save a large deposit, a lower priced property from an auction would mean you need to pay less upfront.

5.       Buy with friends or a partner

If you are starting to feel that buying a home on your own is too big a financial commitment then you could consider purchasing a property with a partner, family member or close friend.  Pooling your resources will mean that you have more financial clout when dealing with lenders and would each need to lay down a lesser deposit than if you were applying independently.

Make sure you can afford a mortgage before you commit

If you are struggling to save for a deposit, when you do start being offered different mortgage products you still need to consider if you can truly afford the monthly repayments.

You should also factor in the extra costs associated with a mortgage, including legal fees, moving costs and stamp duty.