Buying a house is likely to be one of the largest, if not the largest, purchases you ever make. However, the rising cost of buying a home and the difficulty of saving for a deposit have made the idea of home ownership little more than a dream for many.
But there is help out there. We've looked at a number of schemes that can turn buying a house from a dream into reality. With house prices continuing to rise across the UK, many would-be first-time buyers feel they've been priced out of the market and are unlikely to get a foot on the property ladder anytime soon.
Data released by the Office for National Statistics shows that average house prices across Britain rose by 8.4% in the year to August 2016, continuing an upward trend of strong growth that began at the end of 2013.
How much does it cost to buy a house?
ONS figures show the average UK house price stood at £219,000 in August, although with the gap between regions increasing, the area in which you're looking to buy will have a huge impact on the price you'll pay.
Depending on the cost of your home, there are a few expenses you will have to pay:
- Legal fees: £850-£1,500
- Survey costs: £200-1,000
- Local searches: £250-£350
- Stamp duty: 0-10% of house value
Take a look at the BBC's Where can I afford to live? calculator to check the likelihood of being able to buy in your chosen area.
Factoring in associated costs
How much are solicitors' fees for buying a house? How much do estate agents charge? These are just two of many financial outlays you'll need to consider before deciding whether you can afford to move home. Survey fees and stamp duty need to be taken into account, as do ongoing costs once you've completed a purchase, such as buildings insurance and contents insurance. Take a look at our handy guide - How much does it really cost to buy a home? to get a better idea of all the relevant expenses you'll need to budget for when moving home.
What is Help to Buy?
It's widely accepted just how difficult it is to get on the property ladder, and the government has made some attempts to help aspiring home owners.
Help to Buy is the government scheme designed to offer help to first-time buyers.
- Help to Buy ISA: Aimed at first-time buyers, this is a form of tax-free savings account that allows you to build a deposit to use towards your first home. When you're ready to go ahead with the purchase, the government will boost your final savings figure by 25%. You'll be able to save up to £200 a month and claim a maximum bonus of £3,000.
Plenty of banks and building societies offer Help to Buy ISAs, so be sure to shop around to guarantee yourself the best rate of interest.
- Shared ownership: This type of scheme is designed to help those people who can't afford to pay for a mortgage on a whole property. Instead you'll buy a share in a property, ranging from 25 to 75%. Along with paying the mortgage on the section you own, you'll need to pay rent on the remaining portion of the house, which will typically be bought by the local council or a housing association. As your financial circumstances improve you'll be given the opportunity to purchase the rest of your home.
Note that details of shared ownership schemes differ depending on whether you live in England, Wales, Scotland or Northern Ireland. That said, in most cases your household will need to earn less than £80,000 a year to qualify. That figure increases to £90,000 for people living in London.
- Equity loan: Another strand of the government's Help to Buy scheme comes in the form of equity loans. Homeowners and first-time buyers can apply, as long as the property is a new build and worth £600,000 or less. Assistance comes in the form of a loan from the government that covers up to 20% of the purchase price, leaving you to find a deposit of 5% and a mortgage to cover the remaining 75%.
Buyers are able to make do with a smaller deposit than they'd otherwise need and are not required to pay interest on the government portion of the loan for five years.
- London Help to Buy: This is an extension of the equity loan scheme designed to offer additional support to buyers in London. It increases the maximum loan size from 20% to 40% of the purchase price in order to reflect the sharper rise in house prices seen across the capital compared to the rest of the country
- Mortgage guarantee: This scheme sees the government give lenders a financial guarantee, allowing banks and building societies the confidence to offer mortgages with a higher loan-to-value ratio. Essentially, the buyer is able to borrow more up to 95% of the purchase price but the lender isn't being exposed to greater risk as the government has guaranteed the loan
But if you're interested in the mortgage guarantee scheme, be quick - Chancellor Philip Hammond announced in September that it would not be extended beyond 2016.
The right option
Deciding which, if any, of the government's financial support packages are the right fit for you can be difficult. Consider speaking to the Money Advice Service, a free and impartial source of help set up by the government. There's plenty of advice available on the organisation's website and its advisers can be contacted online and by phone. Take a look at our guide on how to save for a house deposit for more information on some of the best ways to get onto the property ladder.