Affording That Dream Home Salary rich but deposit poor?

The new Stamp Duty Land Tax regime introduced by the Chancellor are just one of many reasons why now is the perfect time to enter the property market and start climbing that all important property ladder. An impressive 98% of people are now better off under the new system, while mortgages are becoming more obtainable and legal costs are both competitive and affordable.

So what is holding people back? The deposit is the sticking point. Housing charity Shelter recently stated that on average, it would take the first time buyer 10 years to save a large enough deposit to turn the dream of owning a house into reality. The average price of a detached house in Bury St. Edmunds is now £303,000, so to find a 20% deposit means having to save an eye watering £60,600.

In the meantime the  cost of renting is currently rising at twice the annual rate of earnings and it is predicted that the average price of rent per month will soon exceed the cost of the average mortgage.

Although the Government offers a number of incentives for both first time buyers and existing home owners, interests rates are much better for those who can put down a larger deposit. We are however in a time where even those who are salary rich can often be deposit poor. With escalating rents and the cost of living rising rapidly making it almost impossible to save for a twenty percent deposit, an increasing number of people are turning to gifted deposits from parents and extended family members to get one foot on the property ladder.

Despite mortgage Lenders having a number of special conditions to be satisfied, they still will lend with a gifted deposit provided that the giver signs a Deed of Gift. Although it sounds frightening to lose control of a large sum of money, there are a number of safeguards that can be put in place to protect the money being used to assist a relative in purchasing a new property. Should you require any advice on the different methods of protecting a deposit, owning a property jointly, creating a legal charge against a property or entering into a Declaration of Trust to determine in advance who is entitled to an interest in a property please contact any of our offices.

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