Saving a deposit for your first house can seem like a daunting task. The average house price in the UK reached £288,000 in February and with most lenders requiring a 10% deposit, you would have to save £28,800 before even starting to look for a new home.

With house prices rising and the average time to save for a mortgage being 8 years, it’s not very surprising that around 60% of first time buyers are lending from their parents or grandparents. This can be a great idea to keep interest rates low or non-existent but grandparents may be risking their own financial security or retirement funds by doing so. Likewise, parents who want their children to grow up being independent should consider the way in which they financially support their child.

If you’re looking to buy your first home without asking mum and dad for help with the deposit, there are a few ways to do so:

Government Schemes

The Government has a few schemes that help make buying a home easier. Government schemes can be a great way to get on the property ladder, but it’s important to read the terms and conditions of the schemes carefully, a property lawyer will be able to help with this if you instruct them on your house purchase. Help to buy is a scheme that is offered by lenders in England on both new and existing properties, offering mortgages with only a 5-10% deposit. First Buy is another scheme to be considered that loans first time buyers up to 20% of the price of a new home, meaning you would only need a 5% deposit. Help to buy ISA accounts are also available to help you save for a deposit, the government will boost your savings by 25%, so for every £200 you save into your account you will receive a government bonus of £50. The maximum bonus you can receive is £3000, but if you were buying with a partner he/she may also be eligible to receive up to £3000 in bonuses too.

Guarantor

Some banks may offer you a mortgage with a reduced deposit if you have a guarantor. A guarantor is a person who is willing to vouch for you and put themselves on the line if you miss any repayments. Being a guarantor can be quite risky as it puts your house at risk if the buyer can’t keep up with repayments. If you are considering being a guarantor it’s important you seek legal advice first and ensure you are clear on the amount being guaranteed (as well as ensuring the amount is caped) and clearly understand the risks involved. One of the benefits of buying with a guarantor is that mortgage lenders will sometimes offer you a larger sum than if you were buying with a deposit.

Shared Ownership

Buying part of a property means you wouldn’t have to raise as much money as if you were buying the entire house. To do this you would essentially be buying part of the property and renting the rest. Although you wouldn’t technically own the entire property, it would be a foot on the property ladder. If you wanted to get a 90% mortgage on a 50% share of a house costing £280,000 you would only need a £14,000 deposit, opposed to £28,000.

No matter how you obtain a deposit it’s always important to gain legal advice before entering into a financial agreement, especially one as large as buying a home.

If you need legal advice on drawing up contracts with friends and family, guarantors or any other form of property law contact us here, our dedicated team of property solicitors are happy to assist.