The economy is in a tough place – but there are still lots of things first-time buyers can do to boost their prospects. By Vicky Shaw.
While parts of the UK’s housing market have undergone a mini boom lately, there have also been signs that life is getting tougher for first-time buyers.
The choice of low deposit mortgages has shrunk in recent months, as concerns about ‘riskier’ lending have grown. According to NAEA (National Association of Estate Agents) Propertymark, first-time buyers made up 23% of home sales in August, a fall from 25% in July.
However, while the Covid-19 crisis has brought big financial challenges, it also appears to have made some aspiring first-time buyers more determined than ever.
Just over a third (35%) say the pandemic has had no impact on their plans to buy, according to research from Legal & General Mortgage Club.
With many people spending more time indoors than they normally would this year, more than half (54%) of first-time buyers say lockdown conditions have made it easier to save money. A small group of buyers (8%) have even brought forward their plans to buy.
To find out more about how first-time buyers can make the jump onto the property ladder in tough conditions, we asked Kevin Roberts, director at Legal & General Mortgage Club, to share some top tips…
1. Consider getting advice
Get an adviser on your side and get them to do the work for you. They’re going to know the market. Bear in mind that the mortgage market is busy at the moment and applications could take longer than usual. An adviser will work on your behalf to get your application through as quickly as possible.
2. Be prepared
If there is going to be a ‘flash sale’, which some lenders are doing now, you really want to work with your adviser and have everything ready – your payslips, your identification, everything that you need. Be really on the front foot and know what you can afford. Think about your spending habits – you need your credit score to be as good as possible.
3. Can you save a bigger deposit?
A bigger deposit could give you more choice. For example, if you can stretch from putting down a 10% deposit to a 15% deposit, there are more lenders at this level.
Legal & General Mortgage Club’s research has suggested that some people have been able to save more during lockdown, whether that’s from saving on rail fares or fewer coffees, people have been able to save some money.
4. Do you have a family member who can help?
Perhaps a parent or grandparent may be able to help you to top up your deposit. There are also ‘family assist’ mortgages out there, such as Barclays’ family springboard mortgage, where a helper transfers money into a linked savings account for a fixed period.
5. Could other schemes give you a helping hand?
The government schemes available, such as Help to Buy and shared ownership initiatives, may vary depending on what part of the UK you live in.
There are a broad range of lending opportunities around shared ownership. Some options may allow borrowers to ‘staircase’ out of shared ownership, where they purchase chunks of equity back over time.
There is also the Lifetime Isa, which is available across the UK and comes with a Government bonus. Someone must be aged 18 or under 40 to open a Lifetime Isa.
6. Have your priorities changed?
Lockdown has changed where some buyers intend to purchase and the types of property they are seeking. Think about how your needs may have changed over lockdown and if you do plan to buy a bigger property, don’t overstretch yourself.
7. Finally, remember all is not lost if you can’t buy right now
Borrowers need to get their housing plans moving if they want to take advantage of the temporary stamp duty holiday currently in place. Stamp duty applies in England and Northern Ireland, but similar holidays are also in place in Scotland and Wales. But if you’re not in a position to buy right now, you may still find good opportunities in the months ahead.
There have been some signs recently that rising demand may have potentially increased house prices in some areas. While no one can say for certain what will happen in the future, for some people, it may potentially be a good time to buy next year, when things may be a bit more settled and buyers may possibly find they are in a better position to negotiate.
So don’t give up hope, as by really thinking about your outgoings, trying to save and talking to family members, you could really boost your ability to get onto the property ladder.