First time buyers
‘Buyer beware’? In today’s overheated housing market, if you are trying to get a foot on the property ladder it can feel more like ‘buyer despair’. First time Buyers are finding it harder than ever to get what previous generations would have considered a right: their own home.
This is not just a problem just affecting those at the bottom of the property ladder. The barriers facing first timers are thought to be a root cause in the recent slow-down in the property market, as those looking to trade up to their second or third homes have no-one to sell to.
All is not lost, however. First timers can resort to a range of ingenious tactics to buy property. Here are just a few:
Seek cheaper pastures – While the number of up-and-coming areas available across the UK is rapidly diminishing, it is still possible to find locations that are undervalued. You may have to compromise on amenities, but pick the right place and your investment could grow substantially.
Call on parents – Increasingly first time buyers are turning to their parents for more than just advice. Getting mortgages can be much easier if parents are involved as guarantors or joint borrowers, and the amount you can borrow is likely to be more. At the very least, parents can help with deposit cash.
Buy to let - If you cannot afford to purchase a property in your desired area, one option worth considering is to buy a rental property in a cheaper area. The thinking is that you not only get that first foot on the property ladder but can benefit from any increase in the value of the property. However this method does come with its own risks, e.g. occupancy cannot be guaranteed, so make sure you do your sums properly.
The Financial Services Authority do not regulate some aspects of Buy to Let mortgages
Look for work – A property that requires a certain amount of renovation or even rebuilding work may deter other buyers, reducing the price and the competition. Always speak to a professional about the scale of work you will be undertaking beforehand though.
Buy jointly – Many first-time buyers are young couples but your partner does not have to be a romantic one. If you get on well with one or more friends or siblings it could be worth considering a joint purchase with them. Although remember friends do fall out so ensure that any agreements you do make are enforced by a legally binding contract.
Rent a room – If you are concerned about fully covering the mortgage payments and household bills yourself, buying a property then renting out one or more of the rooms can help in spreading the cost. This could also increase the amount you can borrow.
Share the ownership – Housing associations allow you to buy a share in a home, with the option of either selling it later or extending it to purchase the entire property.
Self-certification mortgages – A growing number of first-time buyers, who find it difficult to obtain a mortgage because they are either self-employed or do not have enough employment history to satisfy lenders, are finding self-certification mortgages a solution.
Homebuyers scheme – If you are buying a new home under the Government’s Open Market HomeBuy scheme (OMHB) with a shared equity loan, you may be entitled to a £1,500 cash grant.
Whichever route you choose, do your research, understand the pro’s and con’s of each option. Speak to friends and family who have done it before you and seek professional advice, talk to an independent mortgage adviser to be sure you choose from the widest possible range of lenders and the most competitive offer. Finally, good luck!
The overall cost for comparison is 6.9% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration.
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