A blonde and brown haired couple both smiling at a phone screen together.

Three alternative routes onto the property ladder.

01 Dec 2022 | 3 min

Getting on the property ladder has never seemed tougher. With rising house prices, increasing competition for first homes, and non-standard careers, securing a place to call home has become even more challenging for many first time buyers.

Add in rising energy and food shopping costs and it’s no surprise that 70% of first-time buyers are delaying buying a home and choosing to rent instead.

But while times are tough, first-time buyers shouldn’t lose hope - there are alternative routes onto the property ladder. We’ve picked out three options that might help remove some of the barriers potential buyers face, and worked through what you need to know to help you decide whether they’re right for you.

1. Shared ownership

Shared ownership lets you buy a share in a home with the option to buy up to 100% of the home over time. It’s a lot like buying any other home, except you don’t have to pay the full price - instead you pay rent on the portion you don’t own, usually to a local housing association. This can help if your income means you’d normally be priced out of the kind of home you need.

What’s good about it?

  • You’re able to buy a higher value property than you would usually be able to afford.
  • You can buy a small share of the home now and buy more shares at later stages – known as ‘staircasing’ - usually until you eventually own it outright. This can be in 10% increments.
  • There are a large range of new-build homes available, with many offering the latest build technology and energy saving features.
  • Like any homeowner, you can sell a shared ownership property at any time and you’re not tied in. And if you make a profit when you sell, you’ll get to keep a share of it.
  • Buying through Shared Ownership also means that Stamp Duty is deferred (until your share reaches 80%). In areas where property prices are particularly high, this can mean a significant saving.
  • Some lenders (like Together) let you borrow 100% of the purchase price for your share, so you don’t have to save a deposit.

Things to think about

  • You will still pay rent to a housing association or other organisation on the share you don’t own but the association would usually have to cover maintenance costs on things like windows, gutters and roofs.
  • You will benefit from inflation if house prices increase, but only as a percentage of the share you own.
  • Some housing associations won’t let you buy the house outright and they can impose some restrictions as to what improvements or alterations you may want to make.
  • It may be difficult to secure a mortgage as not every lender offers shared ownership options.
  • You’ll need to undertake an affordability assessment with the housing association before you buy in addition to one for your lender.
  • Most shared ownership homes are available to anyone, but some are reserved for particular groups - first-time buyers or over-55s, for instance.
  • As with all properties, your home could also go down in value which means you might be in negative equity when trying to sell. Negative equity is when your property becomes worth less than the remaining value of your mortgage. To be in negative equity, the value of your house must fall below the amount you still owe on your mortgage.
    CASE STUDY: Shared Ownership gets divorcee back on the right track

    Following his divorce in 2014, Stuart Macklin was faced with selling the family home and moving back in with his parents. By 2017, having built up enough of a deposit to get back on the property ladder, Stuart applied for a mortgage via his bank - a big high street lender.

    But things weren’t as simple as he first hoped. Stuart was dismayed to find his mortgage application rejected on the basis of his credit score. The deposit he’d worked hard to save was also deemed too small to grant a mortgage big enough for the area he wanted to buy in.

    So, Stuart set about finding an alternative route. He came across Together who suggested he look at Shared ownership. Together then assessed Stuart’s application and agreed to provide a mortgage of nearly £55,000 so he could get his hands on the keys of his one-bed flat in Berkshire worth £225,000.

    Then Covid hit, and Stuart’s employer was forced to furlough staff. Stuart was naturally concerned his dream home could quickly turn into a nightmare and was worried about meeting his mortgage payments.

    “I’d probably only made three payments before I was furloughed,” said Stuart.

    “I was concerned about what that would mean for me and my finances, but Together couldn’t have been more understanding – they offered me a three-month mortgage holiday without me even having to ask.”

    2. Right to Buy

    If you live in a home provided by your local authority (or some other housing providers), the Government’s Right to Buy scheme could offer you the chance to buy it at a discounted price.

    You’re probably eligible for Right to Buy if you’re a secure tenant of a Right to Buy landlord – usually the local council – and have rented for at least three years in England and Wales. As a secure tenant, you can normally live in the property for the rest of your life, as long as you do not break the conditions of the tenancy. If your home was previously managed by the council and has now been transferred to a housing association, you should still be eligible for Right to Buy.

    Your home must be your main residence and self-contained (which means it has its own private kitchen, bathroom and/or toilet, and living area), and you need to have lived there for at least 12 months.

    What’s good about it?

    • If you want to buy your council home, the discounts are generous - making it much cheaper compared to a private sale.
    • The longer you’ve been renting the home, the bigger discount you could get.
    • It gives you the stability of owning your home and you don’t have to move house.
    • You don’t have to have a deposit saved.
    • You don’t have to pay rent and your monthly payments will go towards an asset of your own that you can pass on to children or grandchildren as inheritance.
    • You can borrow up to 100% of the purchase price through Together once the discount is factored in.
    • Once you’ve owned the property for five years, you can sell it on without having to pay back the discount or any share of profit (if it’s gone up in value).

    Things to consider:

    • As a homeowner, you’ll become responsible for all the bills associated with the property.
    • You’ll need to pay for and take care of any repairs or maintenance yourself.
    • Even if you don’t need a deposit, there can be other fees and charges associated with taking out a mortgage. Factor these in and consider all the costs involved.
    CASE STUDY: Right to Buy helps couple put bad debts behind them

    After being rejected for a mortgage for the third time, Ricky Hunter told his wife he had given up on their dream of buying a home. His poor credit history had scuppered his chances of getting a mortgage deal.

    Ricky and his wife Leanne had run into trouble getting a mortgage because of their history of debt. The couple had racked up £22,000 of debt seven years ago, while starting a new family and spending too much.

    Although they paid off every penny, they found themselves in debt once again, and now owe £4,000. It meant lenders were wary of lending the family money to buy their home - Together eventually helped them get a deal through Right to Buy.

    Ricky got a massive £73,100 knocked off the price of his home, meaning the couple ended up paying £96,900 for the house - even though it was valued at £170,000.

    Using the scheme let them bag their home much quicker than they thought - as they didn’t need to put down a deposit.

    3. Buying a property at auction

    You might think that houses on sale at auction are repossessed or problem properties, but homes under the hammer can often provide rare deals on top properties.

    You’ll likely be able to secure the property for below its market value, and get the chance to create a home that’s unique and entirely to your own taste. You’ll also have the option to sell the property once you’ve completed the works, and you may be able to make a return on your investment – giving you a larger deposit for your next home.

    Things to consider:

    • When the hammer goes down at an auction, the winning bidder has effectively exchanged contracts and is legally obliged to complete the purchase of the property.
    • On the day of the auction, you’ll need to pay a deposit – typically 10%, plus some additional fees – either by credit or debit card. You then have around 28 days to pay the balance in full. If you don’t pay within the deadline, you’ll lose your deposit and your right to purchase the property. You may also have to cover the costs associated with selling the property again.

    Want to know more? Read our guide to buying at auction.

    Ready to make your home ownership dreams a reality?

    At Together, we support schemes like Shared Ownership, where you can borrow up to 100% of your share in the property, and Right to Buy – even if you use things like tax credits to top up your income.

    To learn more about the finance products available for first-time buyers, get in touch with your mortgage broker or speak to our friendly team of experts.

    You can also learn more about how we’re supporting the development of new social housing.

    Any property used as security, including your home, may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

    Articles on our website are designed to be useful for our customers, and potential customers. A variety of different topics are covered, touching on legal, taxation, financial, and practical issues. However, we offer no warranty or assurance that the content is accurate in all respects, and you should not therefore act in reliance on any of the information presented here. We would always recommend that you consult with qualified professionals with specific knowledge of your circumstances before proceeding (for example: a solicitor, surveyor or accountant, as the case may be).

    Lending decisions are subject to an affordability/creditworthiness assessment.

    All content factually correct at the time of publishing.

    Personal Auction Finance Mortgage