Getting on the housing ladder sooner with Tembo

Are you struggling to afford your dream home? If the answer is yes, you’re not alone. 71% of millennials worry they’ll never be able to afford to own their own home. But while rising house prices mean it has never been harder to get on the property ladder, luckily there are a range of new, innovative options to help people buy their first home. 

Tembo is a specialist mortgage broker on a mission to help more first-time buyers get access to homeownership. We’ve partnered with them to give you a rundown of what’s out there for would-be buyers struggling to get their first set of keys. 

Income Boost mortgages

Affordability is one of the biggest issues facing buyers in the market today. Why? Well, most lenders will allow a buyer to borrow between 4-5 times their household income, taking into account outgoings, dependents and their credit rating. But in a market where the average house price is ten times average income, it’s clear that even with a healthy deposit saved, most buyers face a gaping affordability gap. 

A savvy solution to this is to use an Income Boost, otherwise known as a Joint Borrower Sole Proprietor mortgage. Particularly useful for low earners or people in the early stages of their career, this form of guarantor mortgage allows a buyer to add some or all of a family member’s income to their mortgage to increase their maximum borrowing. The family member, or ‘Booster’ as Tembo call them, will be jointly responsible for the mortgage, meaning they’ll need to step in if the buyer struggles to pay, but they aren’t listed on the deeds of the property so there’s no stamp duty liability. 

On average, one of Tembo’s Boost customers increased their buying budget by £64,000. That might mean an extra bedroom, outdoor space, or just buying a home in your dream location. Top tip: use SearchSmartly’s lifestyle-based matching tool to discover what a boost to your budget could mean for you.

To use an Income Boost, you’ll need to have a 5-10% deposit saved. With the average deposit sitting at £59,000 for first-time buyers, that’s no mean feat. Let’s look at the options for those that don’t have a house deposit ready. 

Deposit Boost mortgages

An option for buyers who are struggling to save up a health house deposit is to use a Deposit Boost. This service enables a willing family member or friend to release some of the equity they’ve built up in their own home to be gifted to the buyer. Once it has been gifted, it either tops up an existing deposit, or starts one from scratch, so the buyer can get their own mortgage. 

For those who are struggling to save a 5% deposit, the key benefit of this product is that it helps a buyer to get onto the ladder much more quickly than by saving. It can also offer significant saving potential over the course of the mortgage. This is because a larger deposit means the buyer can access lower interest rates. On average, Tembo’s Deposit Boost customers save a whopping £14,000 in interest fees alone over the course of a 5 year mortgage. 

Private Help to Buy equity loans

If family support isn’t an option for you, don’t despair. There are an increasing number of Private Help to Buy options available from innovative new lenders. These companies lend the buyer money through an equity loan, so that they can increase their deposit. 

Typically interest rates are higher on these products, but as the loan size is much smaller than the mortgage itself they can be a brilliant option for higher earning buyers. Each scheme has slightly different rules and criteria. Tembo’s specialist brokers are fully trained on these more complex products, so if you’d like to discuss further, get in touch with them. 

So there we have it. The latest innovation in mortgages, helping first-time buyers to stop renting and start owning. A final tip: while you’re scoping out your options, remember to be flexible on exact locations, as this will increase your options considerably. SearchSmartly’s matchmaking tool can help you find the hidden gems that could keep your commute under the 45 minute mark!

If you’d like to explore how one of these options could work for you, create a Tembo plan today. In under 5 minutes (and with no credit check), you’ll get a personalised mortgage illustration showing how much you could borrow with a Boost.


Had your Offer Accepted? Here’s what to do next

Congratulations! Having your offer accepted can be a huge relief, as you’re a (big) step closer to moving into your dream home. With the relief comes an equal dose of butterflies-in-your-stomach, as in many ways the real work begins now.

Before you can officially call this home yours, there are a few steps still to be completed. Luckily, we’ll make it straightforward and simple to follow to ensure your exchange is as efficient and seamless as possible.

  1. Request to de-list the property: Once an offer has been accepted, it’s good practice to request to the estate agent that the property be taken off the market as soon as possible. Doing so reduces the chance of a competitor submitting a higher offer – the dreading “gazumping”. 
  1. Appoint a conveyancing solicitor: A conveyancing solicitor will be responsible for completing the legal aspect of this transaction from your side of the deal, so it is very important that you appoint the best quality solicitor within your budget, who will be aware of the searches and checks relevant to your property. These searches and checks on average take around 3 weeks to complete and all conveyancing solicitors should ideally be regulated by the Solicitors Regulation Authority or the Council of Licensed Conveyancers. A good solicitor can spot and avert problems early.
  1. Submit a mortgage application: This applies to most home buyers. For those who aren’t buying a property with cash, a mortgage will be needed to fund the purchase of a house which can take up to 6 weeks to complete. Your lender will require the necessary documentation such as: 
    1. Proof of ID
    2. Proof of address
    3. Proof of earnings
    4. Recent bank statements 

We recommend that you research the best mortgage offerings on the market, you can do so via our partner Trussle. Once you’ve found your preferred lender, we advise you to get an agreement in principle from them as this would support the offer your agent puts to the seller.

  1. Organise an independent survey from a RICS surveyor: Your chosen mortgage lender will arrange a valuation of the property to ensure it’s worth what you are offering to purchase it for. At times, there may be differences between the valuation report and what you’ve offered which may require you to go back and negotiate. For your own sake, we recommend organizing an independent surveyor to deliver a detailed report for your keeping. The physical surveys can take up to 8 hours, whilst you can expect a report to be delivered in 7-10 days.
  1. Exchange contracts and deposit payments: Once your searches have been completed, prices agreed and mortgage approved, the final step is to sign and complete on the exchange over the course of the day, which legally commits you to purchasing the property. You’ll be required to pay the deposit and from there, confirm date, completion and moving date.  Once this has been confirmed, your solicitor will ensure the mortgage funds are sent to the seller’s solicitors.
  1. Complete key collection and moving-in: Upon completion, the ownership of the house will be transferred to you, you can now pick up the keys and move-in. At this stage, we recommend that you plan ahead with your key collection, van removal and move-in date to minimise any further delays and fees. 

Altogether, this moving process should take anywhere from 12-15 weeks assuming things go smoothly with minimal delay. The process can seem quite long, but is well worth it when carried out properly, ensuring you can move with peace of mind. 

We hope this guide will provide you with enough information to confidently go through the property purchase process. If you have any questions that are holding you back – our team is here to help, so just reply to this email if you need any assistance!


To buy or to rent?

Is renting cheaper than buying?

For the first time in six years, renting a home is cheaper than buying. Although it is only happening in four areas in the UK – North East, North West, Yorkshire and Humber, and Scotland, the trend might expand further if the pandemic continues. The average private-sector tenant in Britain spent £71 per month less in rent than if they were repaying a mortgage with a 10% deposit. This equates to a monthly spending of £1,054 on rent compared with £1,125 on the mortgage. The new trend might be convincing for many, thinking that they can avoid the headache of a mortgage and significant expenses, and still be better off than home buyers. But what are the actual advantages and disadvantages of renting or buying a house? If you are at a crossroads between buying and renting, this post is for you.

Pros of renting

Flexibility is one of the most important renting pros for many tenants. You can move out at short notice, and move to another home without making a significant commitment to one place. The maintenance of the place you are renting is the landlord’s responsibility, and all the repairs are their duty. 

Additionally, with the flexibility of living in many different places and with different people, you get to know yourself and your preferences about your décor, localisation, utilities and many more. This knowledge might be useful for the future when you actually do buy a home. 

Cons of renting

Renting a home is more expensive in some regions than in others. London’s rents are much higher than North East’s rents, but it also corresponds with the quality of life and work possibilities. Many people use the argument that renting is ‘’paying someone else’s mortgage’’. 

Moreover, as the maintenance of the property is the landlord’s problem, they often fail to ensure the quality or withhold the deposits for general wear and tear. In unfavorable circumstances, tenants have to account for repairs and maintenance on their own. In addition to the ‘questionable landlords’ argument, many tenants are worried that they will be asked to move out within short notice. The constant uncertainty is one of the significant disadvantages of renting. 

Pros of buying 

First of all, buying a house is an investment. In the case of buying a house, unlike renting a property, the mortgage payments will eventually pay off your debt. Any renovations or improvements are effectively investing in your asset, which should reward you at a later date. 

From a more personal perspective, your house means your rules. You can choose the décor, number of pets, number of tenants and the look of the garden. With this said, you can rent a spare room in your house and make extra income. 

As a nation that has historically loved to own their own homes, buying a property certainly has its appeal!

Cons of buying

Inevitably, there are some disadvantages to owning your own home. 

Firstly, it will be more difficult to move if you buy a house. As one of the pros of renting was flexibility, to sell and buy a house in a short period can be a real burden and a source of stress. Additionally,house prices and the unexpected costs to maintain a house can be very high. There are also additional costs of ownership, such as service charges and ground rent for leaseholders, and homeowners insurance in the case of older properties.

To pay off the mortgage and maintenance cost, you must guarantee a consistent income, even if you have a good credit score. Moreover, you have to consider that interest rates can increase and your monthly payments alongside them. 

Whether we convinced you to buy a property or rent it, check out SearchSmartly’s intelligent property search platform , where you can find houses, flats and rooms satisfying your individual needs. 


Up to 50% off your first home?

Government’s New First Home Initiative

If you’re a First-Time home buyer, there is no doubt that you have heard about the Government’s new First Home initiative. But maybe you are not sure what it means for you, or whether you are eligible? Maybe buying a home was out of the question before you could get up to a 50% discount on your purchase? If these are the questions you have been asking yourself, then read on as we explain it all in great detail.

What is a First Home Initiative?

Without further ado, if you’re buying a house for the first time, you can get a discount of a minimum of 30% of the house price. The discount can reach 40-50% if the local authorities demonstrate a need for this, based on the social demographics of the area. For the discount to be applied, the first price of the house must be no higher than £250,000 (with an exemption of £420,000 in Greater London). Therefore, this initiative can save you a whopping £100,000 or more! 

Who is eligible to purchase First Home?

To participate in the First Homes initiative, you have to be a first-time buyer. The purchaser can be an individual, a couple or a group of individuals. What is crucial, is that the combined annual household income of the purchasers cannot exceed £80,000 in the tax year immediately preceding the year of purchase. Additionally, the purchaser of First Homes must have a mortgage or house purchase plan to fund a minimum of 50% of the discounted house. 

However, be aware that local authorities might have additional eligibility requirements. Additional criteria might involve lower-income caps, local connection status or employment status checks. Authorities may also prioritize key workers, especially if a particular profession is in-demand in the area. However, you should not feel discouraged as additional criteria requirements are continuously reviewed. They are also carefully monitored to not restrict eligible candidates too much to the point where it becomes too difficult to sell any homes. Another point of concession is that local authorities’ additional criteria is only in place for 3 months from when the house is first marketed. If the home is not sold successfully within those 3 months, the additional criteria is scrapped and replaced with the more lenient national criteria.

Which homes can be First Homes?

Any home can be eligible for the discounted purchase, but for newly-built homes specifically, the home developers must show proof that the houses match the definition of “affordable housing” and meet First Homes’ criteria. The house can not be sold at a lower discount than 30% and the price cannot be higher than £250,000. Additionally, the legal restrictions on the sale and use of the property, must be registered onto the title of the First Home on its first sale. The aim of it is to ensure that the discounted price will be applied to all future sales of this property. 

With the First Homes initiative it is easier and cheaper than ever to finally buy your first property. If reading this article gave you the smallest seed of the idea of buying a house, why not check the available homes that would suit your needs on SearchSmartly’s intelligent property search platform?