FAMILIES on a budget can often struggle to find a home they can afford that’s big enough for the little ones.
First-time buyers Stacey and Simon Carr nearly gave up hope after thinking they had been priced out of the market while searching for a four-bed home.
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Larger properties come with a heftier price tag – which means you have to save more for a deposit, which is usually at least 10%.
It meant Stacey, 35, who works in HR for a parcel company, and engineer Simon, 35, thought they would have to save for years to be able to afford a home for them and their two kids Aaron, 15, and Lyla, 12.
But using the government’s new Deposit Unlock scheme helped them to fast-track their way onto the property ladder.
The scheme was launched officially in November last year and lets you buy a new build house worth up to £750,000 with just a 5% deposit.
Lenders see it as a risk lending borrowers a mortgage if they don’t have at least a 10% deposit saved up.
But the Deposit Unlock scheme encourages lenders to offer more mortgages worth up to 95% of the property price.
That’s because the builder takes on this risk by paying for insurance to cover all costs should the homeowner might default on the loan.
However, not many mortgage lenders are signed up to the scheme – only two have agreed to offer these mortgages, which are Nationwide Building Society and Newcastle Building Society.
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And you can only apply to the scheme if the developer you are buying your house from has also signed up to take part.
Currently, 19 builders offer the help, according to the Home Builder’s Federation.
Stacey and Simon found a lender and a housebuilder both signed up to the scheme and put an offer in for their £237,995 home with just a £11,899 deposit.
They got the keys to their home in March this year.
The Sun asked Stacey how the family managed to keep on track with their savings to buy their new home for The Sun’s My First Home series.
Tell me about your home
It’s a four bed new-build house in Hebburn, near Newcastle.
One of the bedrooms is a study because I work from home.
We have a family bathroom and me and Simon have an ensuite. There’s a toilet downstairs too.
Downstairs is my favourite part of the house – we have a big open plan lounge, dining room and kitchen.
We like having guests over so it means I can talk to them while I’m cooking dinner.
How did you decide on location?
Me and Simon have always lived in Hebburn so we didn’t want to leave this area.
We wanted to keep close to friends and family.
The house is also near the kids’ school.
How much did you pay for it?
The house was £237,995.
Our mortgage is £226,096 over a 30-year term at a two-year fixed rate of 3.5%.
Our mortgage repayments are £1,015 a month.
We were able to put down just a 5% deposit for it at £11,899 because we used the government’s new Deposit Unlock scheme.
It lets you buy a new build house worth up to £750,000 with just a 5% deposit.
We wouldn’t have been able to find a home big enough for the four of us in our budget if it wasn’t for this scheme.
Initially we looked at applying for the Help to Buy scheme, that sees the government loan you up to 20% of the value of a new build property – or 40% if you live in London.
However, there are regional price caps in place – in the North East, where we live, you are only eligible for the scheme if the property you want is under £186,100.
But the cost of family-sized new build homes we were looking at higher than this – so we were priced out of using the scheme.
We found out about the Deposit Unlock scheme through our mortgage advisor.
Newcastle Building Society is one of the lenders taking part in the scheme.
We signed for the Deposit Unlock scheme as part of our mortgage application with Newcastle Building Society – who are one of the lenders who have signed up to the scheme.
Apart from that, we didn’t have to do anything – it was very straightforward.
One disadvantage of using the scheme though is that we weren’t entitled to any freebies or discounts from the developer of our house.
Sometimes the builder will contribute money to the deposit or install appliances like fridges and washing machines for free to clinch a deal, for example.
How did you save for it?
It took us three years to save.
We struggled to put away a lot because we were renting at the same time, paying £795 a month.
But Covid really set us on the path to saving hard for our home after our holiday to Florida was cancelled.
We were supposed to go in May 2020 but because of travel restrictions, our package holiday, worth £3,500, was cancelled.
Instead of moving it to a different date, we opted for a refund and used it as a springboard to motivate us to save more.
We also got a refund on our season tickets with Newcastle United football club, and the kids could no longer play football or take gymnastics classes, which all together saved us £200 a month.
We also halved our spending on takeaways from £120 a month to £60 – now we make our own Nandos at home.
Making the most of sales helped us deck out our house for less.
We didn’t have a great deal of spare cash to do up our home, so we had to be clever with our money.
We shopped for our more expensive items in the sales.
During Black Friday last year, we got a sofa from DFS that was £1,300 but was reduced to £759.
For Christmas, our families gave us vouchers as presents which totalled £250 – we used them to buy our kitchen table from Dunelm and a slow cooker.
What’s your advice for other first-time buyers?
I would never have known about the Deposit Unlock scheme if it wasn’t for my mortgage advisor – so it’s worth getting a good one.
Do your research on what schemes you can apply to to get on the ladder quicker.
I also set a countdown on my phone giving me reminders on how long it was until we completed on the house.
That really kept me motivated to save more.
We also involved the kids in the process to make it fun.
We asked them to plan what their bedrooms would look like so we could all keep in mind why we were saving and cutting back.
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