How Can First Time Buyers Get on the Property Ladder?
Want a home of your own? Buying your first property is special, one of the most exciting things you can do in life. No more having to move when your rental agreement runs out, no more putting up with someone else’s décor and taste, no more uncertainty around how long you’ll be able to stay. At the same time, property prices have been steadily rising for decades, making it harder as time goes by for people to afford their own place.
Luckily, while it can be tough getting on the property ladder, there are some things you can do to take the pain out of the experience and make it easier for yourself. Here’s our essential guide to buying your first property, covering all the most important steps to take. By the end of this article you’ll know exactly what you need to do to get going.
Saving for a house deposit
There’s no getting around it. Even the government’s Help to Buy scheme requires a deposit of at least 5% of the property’s value. With the average cost of a home in the UK standing at almost £266,000 and a 5% deposit stacking up to £13,300, buying your first property is quite an achievement. The average house deposit is around £25,000 these days, so how can you go about saving that much money? Sadly there isn’t a magic bullet, it’s a matter of salting away all the space cash you possibly can. It might also mean selling unwanted stuff, being careful around what you spend. The key is taking small steps, which eventually add up to bigger steps.
Here are a few creative ideas to get you going with buying your first property:
- Decide what you can save every month and stick to it rigidly – set up a DD or standing order so you can’t back out too easily and lose your momentum
- Spend one weekend in each month not going out, and save the cash you would have spent
- Save the same as you spend- if you splash out £50 on shoes, save £50 as well
- Set up a savings account rather than keeping all your money in the same place
- Pay off your debts, prioritising those with the highest interest rates
- Search for the best deals on essentials like TV packages, electricity, gas, and phone contracts
It makes a lot of sense to get saving early, as soon as you’re in a position when you’re earning enough to make saving possible. This means you’ll get where you want to be faster, more easily, and more smoothly. Once you’re used to saving it can become an enjoyable challenge, a great life habit to get into whether or not you’re buying your first property.
Speak to a mortgage adviser
The mortgage scene is complicated. There are different types of mortgage product and loan to think about, different ways to repay the loan and a great many providers, all with their own deals to offer. Unless you know the score, it can be a minefield. You will enjoy talking to a mortgage advisor, an expert who understands the ins and outs, can explain it to you clearly, and knows the pitfalls as well as the tricks and tips.
Some mortgage advisors work for just one lender, tied to their products and unable to offer you any alternatives. Some are registered with a suite of lenders so have more choice to offer you. And others are able to search the entire market for you with no restrictions. Whatever type you choose, make sure they’re properly registered with the Financial Conduct Authority (FCA), which means they’re officially able to provide financial advice you can trust. They’ll be able to work with you, using your unique circumstances to find the perfect loan with the best mortgage rates. The earlier you can find a great adviser, the better. Then you know exactly what you’re aiming for, and exactly what it all means to you, your bank balance, and your future.
Research which areas you can afford to buy a house in
You might have dreamed about living on a certain road. It’s your ideal fantasy but it’s an expensive road. It’s always best to draw a film line between what’s affordable and what’s completely out of reach. Loans have to be repaid and over-extending yourself is never wise, no matter how exciting the possibilities might seem at the time.
It’s really important buying your first property that you can genuinely afford, whose mortgage repayments won’t bankrupt you and which won’t leave you at risk of repossession. One good tip is to widen your horizons. You might find the perfect property three streets away from your dream location, or find somewhere better, bigger and more affordable within a few hundred metres or a couple of miles. The more flexible and practical you can be, the better chance you have of landing yourself a beautiful bargain. Don’t forget to think about your commute, too. A long, difficult commute twice a day can make all the difference between a life you love and feeling worn out all the time. There are probably more factors you’ll want to take into account, things like schools, parks and gardens, shops, restaurants and more.
Be patient when buying a house
It’s tempting to throw yourself out there and get over-excited about buying a property, especially when it’s your first time. But there’s no real value in rushing. Quite the opposite. While your final decision about your first home will have a strong emotional component – it happens to us all – keeping the practical aspects of the whole thing in focus and taking your time means you’ll get a much better, more accurate picture of what’s out there, how much it costs, and the down-sides and up-sides of various locations. Over time you’ll feel calmer, more able to make a decision based on experience and research rather than just the thrill of the chase. And it’ll mean you’re less likely to make an impulse decision you might regret later.
There’s more. The housing market can change, as can your job and your income. It’s important to factor this in, even if it isn’t exactly the most thrilling part of your journey. You need to be 100% happy with your choice and all its implications. And that’s why it’s worth waiting. It’s also wise to know that the perfect property might not immediately pop up. It can take time, dedication and lots of happy hunting. How to buy a property sensibly? Try to enjoy the process, don’t get stressed, and never rush a decision around a loan that’s going to come to hundreds of thousands of pounds no matter where in the country you buy.
Don’t be afraid of renovating
You might be surprised how much money you can save by buying a place needing some renovation. Some property developers manage to turn a good profit simply from redecorating then flipping a property. This makes it entirely possible to shave a small fortune off the buying price of a home identical to the newly-decorated property next door, and that’s first time buyer gold dust.
Renovating can take many forms, from a relatively simple lick of paint to remodelling the interior to add extra rooms, knocking through to create open plan spaces, replacing old windows and doors, even re-carpeting and rewiring.
The most obvious benefit of renovation is you can achieve a cheaper asking price, which means a smaller loan and lower repayments. It’s easy to add value by renovating, which puts you in the happy position of owning a place that quickly becomes worth more than you paid for it. Renovating makes you feel like you’ve made a greater personal investment in your home, something to be proud of.
On the downside, buying your first property for renovation means you’ll need to investigate the cost of renovating very carefully before you buy, and do your best to ensure the state of the property is hiding serious flaws. A good survey will help you with that, as can quotes from builders, electricians, decorators and so on. Do you have the money handy to renovate, or will you find yourself living in a tip for months or even years while you save up? Is it worth it? It can take a long time to complete complex renovations as well as a lot of money, and you need to beware of spending more than you could possibly recoup through the eventual increase you’ve made to the value. And of course quality renovations are a must, so you’ll need to keep a close eye on your contractors.
Help to Buy Schemes
The help to buy scheme is a government-backed way to help first time buyers getting on the property ladder. The current Help to buy scheme is available in England but also offers individual schemes for Scotland, Wales and Northern Ireland. It helps more people get on the property ladder by making buying more affordable. You only need a 5% deposit, and the government lends you as much as 20% of the value of the property. This is called an equity loan and it is interest free for five years, after which you start to pay interest. You just need to find a good 75% repayment mortgage. These schemes are only open to first time buyers and the current scheme lasts until March 2023, with no changes planned before then.
How to buy a property via Help to Buy? To apply, find an official Help to Buy agent in the area where you want to buy a home. There’s a different maximum cap on property values for various areas of the country, simply because the average property price varies so widely.
One more vital thing you need to know before you go down this avenue – Help to Buy is exclusively for brand new homes, for new builds that have never been owned by anyone else. And if you’re a couple wanting to buy under the scheme you both have to meet the strict Help to Buy criteria. If you’d like to know more about Help to buy, click through to this article that explains everything clearly.
Shared ownership is growing in popularity, simply because property prices keep rising and as time goes by, fewer first time buyers can handle the enormous cost of buying a first home. The old days of a three times salary mortgage are long gone, with few first timers earning enough to take advantage of that kind of old-school mortgage deal.
How to buy a property via shared ownership? Shared ownership is also called part buy, part rent, which gives you a few clues about it. It allows you to buy a share of a property rather than the whole thing, and pay rent on the rest. This kind of scheme is great for people who only have a small deposit, struggling to save or on a low income but able to afford a small mortgage. It’s a reliable and popular option for many people who are thinking about getting on the property ladder.
Your stake in the property will be anything from 25% to 75%. The non-profit housing association supplying the home owns the remainder, on which you pay rent of up to 3% of the value. There’s usually a minimum 5% deposit but the deposit % applies to the part of the property you own, not all of it. Your share is paid for via a mortgage.
This type of scheme is also available to first time buyers, but also to people who have owned a home before but can’t afford to buy now, and existing shared ownership homeowners who want to move house. You must earn less than £80,000 a year as a household if you live outside London, rising to £90,000 if you live in the capital.
Get started on the property ladder with Strawberry Star
Are you ready to press the first time buyer button? Strawberry Star has many great properties on offer to get you started on the property ladder, and we also provide an excellent help to buy scheme. Walk this way for a friendly service provided by experts who know everything there is to know about buying property in the UK.