It's a huge, expensive step but can be done - so soak up these expert tips, says Vicky Shaw. This year could be a bit uncertain for the housing market, which may be making first-time buyers feel somewhat nervous. However, some recent figures may offer some reassurance for those trying to make the jump onto the property ladder.
Research from Yorkshire Building Society suggests the number of first-time buyers getting on the property ladder with a mortgage in the last year, was at its highest level since 2006. Across the UK, 367,038 first-time buyers secured mortgages in 2018, up from 362,800 in 2017, the analysis suggests.
There are also some steps first-time buyers could take, which may boost their chances of bagging a property. “Buying a first home can be as daunting as it is exciting, but there are a number of simple steps people can take to prepare themselves and make the process as smooth as possible,” says Chrysanthy Pispinis of Post Office Money.
Here are Post Office Money’s eight top tips for getting on the property ladder…
1. Set a savings goal
Three-quarters (75%) say that saving for a deposit is the biggest hurdle to home ownership, with first-time buyers spending four years adjusting their lifestyle to save for their starter home, according to a survey of people who recently got on the property ladder. So setting a savings target early is important to keeping you focused and on track.
2. Factor in the additional costs of moving
Aspiring homeowners must not forget additional costs associated with buying a home, such as removal firms, estate agent fees and surveyors. It’s important to consider these costs in advance and save little and often.
3. Take time to talk
Parents – as the ‘bank of mum and dad’ – are playing an increasingly important role helping many first-time buyers onto the property ladder, loaning on average £24,347, according to Post Office Money. But of the one in six first-time buyers funding their home purchase from a parental loan, 87% have no proper agreement in place, its research also found.
Therefore, it’s important everyone involved is clear about the nature of their agreement, so that everyone’s expectations are aligned. This includes making it clear whether the money is a gift or a loan that needs to be paid back. Post Office Money has a ‘bank of mum and dad conversation guide’, which could help with such conversations. (postoffice.co.uk/dam/jcr:93ea6a47-6444-4ac8-8a22-c091054a3541/Mortgages-Advice-Doc.pdf)
4. Calculate how much you can afford to borrow
Once your savings pot is up and running, consider using an online affordability calculator to get an idea of how much you’ll be able to borrow based on your income and outgoings. Although this should be used as a guide, the information will help you focus on properties that are within your price range.
5. Know the (credit) score
Before getting a mortgage, you will be credit checked, so now’s the time to check your own credit report and ensure all the information it contains is accurate and up-to-date. A good credit score can be the deciding factor in not only getting approved for a mortgage, but also the rate you are offered. Plan now to start paying down any outstanding debt, be sure not to miss any agreed payments on utility bills or mobile phone bills, and try to make more than the minimum repayment in the six months before your mortgage application.
6. Find the right mortgage for you
There are lots of mortgages out there aimed specifically at first-time buyers, including some very innovative deals.
7. Research affordability hotspots
You may have your heart set on a popular area – but so will many other buyers.
On average, new buyers will end up moving 5.2 miles away from where they originally intended. Consider widening the net to make your budget go further, so you can buy more bricks and mortar for your money. You could try searching in up-and-coming areas, which may become future property hotspots, rather than places where property prices have already increased by a lot.
8. Know the local rate of sale
On average, it takes 102 days for a property to sell in the UK. Understanding the rate at which property sells in the area you’re looking to buy in can potentially help when making buying decisions.
If you are starting your home buying journey and would like local, financial or property advice please pop in to your closest office for a cup of tea and a chat with our team, they will be delighted to give you all the help you need.
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