Tips For Getting On The Property Ladder
High mortgage prices and job uncertainly means that less people than ever are entering the property market, with many choosing to rent instead. As we specialise in removals in UK and around the UK, we’ve gained a number of tips to get on the property ladder. If you’re thinking of getting a place of your own, read on for some top tips from our property gurus…
Many local housing associations are providing shared ownership schemes that are proving popular with first time buyers. These schemes allow residents to buy a share of a property with a mortgage (of 25% to 75%), and pay a reduced rent on the remaining share. This reduces the amount needed for the initial deposit, making home ownership more affordable.
Certain criteria need to be met:
- A household income of £60,000 a year or less (£64,300 in London)
- You’re a first-time buyer
- Priority usually goes to people who rent a council or housing association property
Save as Much as Possible
By definition, saving means that all sorts of spending should be cut out, making it quite a depressing prospect but, it’s actually the quickest and easiest route to getting a foot in the door of the property market. Going out, frivolous buying of clothes and other lifestyle choices should be sacrificed over a short period as much as possible. This won’t be forever, however it will help you to save enough for a deposit or at least make a big dent in what can seem like an impossible task. In order to get an affordable mortgage rate, first time buyers should aim to have at least 10% of a home’s value, though 15 to 20% is advisable.
To put this into context, the average property costs around £170,000. Last year, this went up by 9%. This means that similar growth is required of would-be home owners, with them needing to aim for £180,000. The deposit would be roughly £18,000.
If wannabe property owners manage to get 5% of a home’s deposit, there are schemes and deals offered by the government that can help make up the shortfall. One of these is the Help to Buy scheme. For those who want a new build, an equity loan can help. This means that owners put down 5% of a deposit for a government investment loan of 20%, then 75% can be borrowed from a mortgage provider. For the first five years nothing will be charged on the 20% loan, which will then have a competitive interest rate for repayment.
A strict lending criteria needs to be met to prove that owners can actually afford there new purchase. Those who are not buying a new home can benefit from the Help to Buy guarantee scheme. This means it could be easier to get a 95% mortgage – on average a first time property buyer will need to save £9000 a year.
Do you have any tips for first time buyers? Share your thoughts of us on social media!