You have come across a great property deal, but are you waiting for your old home to get sold? If you find yourself in this situation, you are not alone. Undoubtedly, many people in the UK fantasise about buying their dream home when it is available at never before rates. However, the price of a house never stabilises. The price may be low at the moment and might become a way more expensive when you are actually being able to afford it. While we all dream of buying our dream home as soon as possible, managing finances remain a serious concern for many.
Fortunately, there are numerous financing options available than you realise. In this post, we will guide you on all possible ways of funding your dream home in the easiest way possible.
#1 Borrow from family and friends
Borrowing from friends and family is the most affordable and efficient way to fund your dream home if you are taking this money as a debt and plan to repay it in due course. Not only it will save you from a great deal of time, efforts and paperwork, but also borrow from a familiar lender, who will be more compassionate and sensitive to you in case you are unable to repay in the specified time due to unforeseen situation.
While borrowing from friends and family may be a quick fix, but it can put a strain on the relationship if you are not able to pay on time when they actually need it. Hence, go for it only when you are falling short by a little amount. Also, ensure you have a solid repayment plan in place before you borrow from your relatives.
#2 Go for bridging finance
Bridging loan London is available from financial companies that provide the funds you need for the short-term to buy your dream home before you sell your present home. The bridging finance provider will calculate how much money you owe on your current mortgage and combine with the cost price of your new home to give you short-term funds at the best rate.
Bridging loans eliminate the need of selling in a hurry and makes the process of buying a new home easier. You take the bridging loan, buy your dream home and repay the amount in full when your existing property gets sold. If your current home takes longer to sell than expected, you will only be paying interest on your total debt.
#3 Liquidate your assets
Has your mom’s gold jewellery been put in the corner of the shelf and not in use currently? Now it’s time to take them out and get a gold loan against them. A gold loan is a secured loan in which the borrower puts the gold with a private lender or financial institution as a security and get funds against the value of the gold. This is similar to mortgage loan where the borrower offers the property as mortgage to the bank and get the necessary funds to fulfil their needs for capital.
A gold loan is one of the most secured loans as lenders are free from the worry that is because the jewellery which is taken as collateral will remain with the lender even if the borrower fails to make the monthly payments of the loan.
#4 Remortgage your existing home
Another cost-effective way to arrange funds for your new home is to remortgage your current home as long as there are no early repayment charges to pay. For this to be a feasible option, you will need to have a significant equity on your home. Once you acquire your new home and sell your old home, you can pay off the mortgage on it.
Remortgaging your existing home is a good way to get funds for your new home that is because it will not last for longer than a few years as your home will probably get sold within this time. The only thing you need to keep in mind is the deal you choose doesn’t have early repayment charges beyond that period, so you can pay off your mortgage without additional charges.
#5 Consider Rent-to-buy option
Rent-to-buy is a popular scheme, which is endorsed by the government for people who don’t have enough funds to buy their dream home right now, but wish to buy it in the future. In this scheme, you can rent a property for up to five years at a discounted rent as well as save for a deposit in the meantime. At the end of two years, you have the option to buy the property or move out.
If you decide to purchase the house, you will receive about 25% of the rent you have paid and 50% of the increase in the property value since you paid the rent to use as a deposit on the purchase. The idea of this scheme is to offer lesser than market rents and give buyers a chance to save for the cash deposit, so they can buy the home later.
Points to Keep in Mind Before Purchasing a New Home
- Take surveys of the prices of other properties in that area.
- If required, ask for repairs before buying.
- Do research about amenities and accessibility to basic necessities in that area.
- Bargain as much as possible.
Conclusion
A dream of buying a home doesn’t require money, but turning that dream into reality does. Perhaps buying a home is the most expensive investment you would ever make in your life. Hence, give yourself some time to figure out all possible income sources along with maintaining your monthly budget. When it comes to raising money, there are several ways you can acquire funds. However, you must understand the ins and outs of each beyond the scope of this post. We recommend that you explore all the options rather than jumping into a traditional mortgage. Discuss your requirements with an expert financial advisor who can advise on the best suitable option for your needs.
