15 steps closer
Trying to get on the property ladder? Check out our tips to improve your chances.
According to research from moneysupermarket.com, in order to secure a mortgage, first-time buyers need an average deposit of £32,000.
Raising this cash is likely to be the biggest hurdle they’ll face, so the key is to start saving as soon as possible. If you’re renting, you could cut back your spending by moving in with your parents or, if you’re living in a one-bedroom flat, consider renting a room in a shared house.
2 Family help
It’s becoming increasingly common for parents – who understand the difficulty of securing a first home – to offer their children financial help to get them on the property ladder. Generous parents can provide a cash gift to be put towards the deposit, or they can act as a guarantor on a mortgage which means that, if the borrower misses or can’t make a repayment, the parents are liable.
If you can’t afford to buy on your own, why not get together with a friend? By pooling your resources, you will have a bigger deposit which means you can borrow more. You’ll also reduce your outgoings by sharing bills and expenses. But do draw up a legal agreement in case one of you wants to get out or can’t pay the mortgage.
4 Shared ownership
If you’re a key worker (for instance, a teacher or an NHS employee), and you’re a first-time buyer or a council or housing association tenant and earn under a certain amount of money, there are affordable housing schemes that help you part-own a property or get a loan towards it. To find out more about the HomeBuy scheme, visit www.direct.gov.uk
5 Buy ex-local authority
The main advantage, when buying an ex-local authority home, is the reduction in price. Previously owned council homes can be up to 20% cheaper than their period counterparts because of their lack of character, statistics show.
6 Search for incentives
It’s not just first-time buyers who are struggling in the current market. Developers are feeling the pinch, too, and are offering incentives and deals to persuade people to buy. Some new-build developers might pay your legal fees, stamp duty, insurance or even your deposit, while others are slashing the prices of their properties. Search local newspapers for the best deals.
7 Buy off-plan
You can pick up a pretty good deal by buying off-plan. This is when you agree to buy a property while it is still under construction but securing it at today’s prices. It’s ideal for people new to property because at first it requires a deposit, but the next instalments are spread over a lengthy period of time, giving you a few months to save and organise a decent mortgage. And in the construction stage, the value of the property can grow considerably.
8 Change location
House prices differ hugely around the UK, so if you’re struggling to get on the property market where you are, could you consider a move? Relocating from London or the South East to an area further north will often mean more affordable housing.
9 Shop around
‘Almost two-thirds of first-time buyers fail to shop around, accepting the first mortgage they’re offered and often missing out on better deals,’ says Don Suter, managing editor of online directory, www.ukpropertyportal.co.uk. ‘Instead, they’d be well advised to do a little research before they commit,’ says Don. You can find good deals by checking your bank or building society for special offers, finding out what deals financial advisers can offer, or searching online. ‘And check the small print to find out if there are financial penalties for opting out of the deal early or if there are any hidden costs,’ Don says.
Buying a place that needs a bit of work – a new bathroom or kitchen, for instance – can give first-time buyers a chance to own their first home. You should be able to buy it more cheaply than other places in the area and you can do it up in your own time.
If you can’t find a house or flat within your budget or if you want to get on the property ladder quickly, it may be time to rethink your criteria. Could you do without the garden or a second bedroom?
If you are a first-time buyer with no chain and have sorted your mortgage, you’re in a good position. Check if the seller has had the house on the market for a long time or is in a hurry to sell. If so, they may be prepared to accept a lower offer.
13 Rent to buy
Also known as a lease-option, this scheme allows you to rent a property with the option to buy it after a fixed period, normally three to five years, at an agreed price. There’s usually an upfront payment, which can be as low as 2% of the property value, and which is taken off the agreed price. Jon Green, chief executive of The Lease Option Company, says: ‘For many first-time buyers, lease options can offer a much better deal than a conventional purchase. You needn’t take out a mortgage straight away, giving you time for your financial position to improve so you can afford to buy at the end of the rental period.’
14 Buy at auction
Properties can often be secured at a reasonable price at an auction. More than 30,000 properties are sold this way every year with buyers saving up to 40% on high street prices, according to thisismoney.co.uk When buying a first home at auction, Graham Barton, of Fulfords Auctioneers in the West Country, says, ‘First, check out the condition of the building with a builder or surveyor so you know what you’re taking on. Then get the legal package from the auctioneer with conveyancing information for your solicitor to peruse before you go to the auction. And, finally, remember that, once the hammer falls, you have 28 days to pay the money in full.’
Rent a room
If you’re worried about meeting the monthly repayments, you could consider getting a lodger.
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