Save To Buy With Just 1% Deposit
Last Updated: 02/08/2023
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Key Takeaways
- You will need to be a first time buyer in full time employment to apply
- Available properties are in Epping Gate, Essex and Hayes, west London
- Properties range from 1-3 bedrooms and £330,000 to £500,000
- The minimum deposit required (if you are able to get a 5% deposit mortgage) would be £16,500, but you'll only need 1% to move in (£3,300). A prospective buyer paying £1,500 per month would save a deposit of £18,000 in just one year.
How can I save for a deposit while renting?
With rent costing us near to 40% of our take home income, compared to just 30% a little over 20 years ago, and the cost of living crisis squeezing us tightly, many hopeful homeowners are sick to the back teeth of hearing advice like 'cut down on avocado toast and lattes'.
A new Save to Buy scheme by Fairview New Homes allows buyers to move into their home up to 2 years before you buy, making monthly payments, like rent, but which go 100% toward your deposit. This saves buyers from the seemingly never ending task of saving and renting at the same time. The scheme will close at the end of 2023.
It takes the average Londoner over 15 years to save a 20% deposit
1% deposit mortgage
Typical low deposit mortgages can be hard to get, or rely on a well-off friend or family member to share your mortgage or 'off-set' your deposit. The way this scheme overcomes these downfalls it that when you move in, you only need 1% of the property's value. You exchange when you move in, for up to 24 months you put 100% of your monthly payments toward your deposit, and you don't complete on the purchase until you've built your deposit up for a regular mortgage (usually 10%) so you'll be buying with a reasonable chunk of equity.
Unlike other schemes (Rent to Buy) you don't have to pay any rent while you're saving your deposit, so you won't be 'wasting' any money, from the day you move in.
One month before you have paid enough into the scheme for a sufficient deposit, you make your mortgage application. If this is approved, you'll be able to complete the purchase, and become the new owner.
What happens if I can't complete my Save to Buy?
If you are unable to complete the purchase, you won't get the money you've put toward the deposit back, but you will get to keep your initial 1% deposit. The monthly payments are based on local rent and your personal finances, so you will have spent what you would have been paying on rent anyway.
Will I own my Save to Buy house outright?
Once you complete your purchase, you will own 100% of the property and the developer will retain 0% of the ownership or interest. This differs to other schemes like Shared Ownership, where you must pay rent on the share owned by the housing association.
What is the Save to Buy process?
- 1
Save a 1% deposit to apply
- 2
Apply & get accepted via a financial assessment
- 3
Instruct your conveyancing solicitor or licenced conveyancer
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- 4
Exchange contracts and move in
- 5
Pay no rent and put monthly payments toward your deposit
- 6
Apply for your mortgage when you've got a big enough deposit
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- 7
Draw down your mortgage to complete the purchase
Frequently Asked Questions
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Written by:
Caragh Bailey
Caragh has written extensively for SAM with expertise on sale and purchase conveyancing, the Help to Buy redemption process, equity transfers and deeds, leasehold reform, RICS home surveys, shared ownership, and independent legal advice for specialist mortgage products and ownership structures.
Reviewed by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
