How to get on the property ladder

For many budding homeowners, the last 12-18 months have made for miserable reading in terms of the housing market.

Property prices have been rising to record highs, even despite Brexit, and inflation is forcing Mark Carney, governor of the Bank of England, to consider raising interest rates in the “relatively near term,” which will see mortgage costs increase.

Starting by renting is also becoming more difficult to convert to homeownership too, with higher rents and fees over the last decade.

Here are a few points to consider if you think all is lost:

An interest rate rise will be negligible

Interest rates have been at record-low levels for some time now, and a quarter point rise to 0.5% would only see a return to where the median rate has been for the most part of the last decade.

Fixed rate mortgages, at 2-years and 5-years, are very competitively priced despite house prices rising.

Help to Buy

The Help to Buy scheme has helped 81% of first-time buyers get on the property ladder in the second quarter of 2017, and can assist buyers in getting on the property ladder.

This can be either through:

  • the Help to Buy ISA, where you can save up to £12,000 with monthly savings of £200 per month, and be rewarded with a 25% bonus from the Government; or
  • the Help to Buy equity loan, where you can borrow up to 20% of the house price from the Government (or 40% in London) for new build properties.

Lenders have also starting offering 5% deposits to help first-time buyers get on the market.

Bank of Mom and Dad

In many surveys, younger generations and first-time buyers have outlined the initial deposit as the hardest thing to save up for, with inflation making matters worse for those counting the pennies. Barclays, for example, have even brought out a mortgage that does not require a deposit, so long as your parents provide security for 10% of the mortgage amount.

Four in five first-time buyers will turn to their parents to help get to the deposit amount. However banks are also accepting 5% deposits in cases whereby family support would not be possible.

Joint ownership

One in ten first-time buyers have looked at buying a home with a friend or partner to get around the affordability problem. However issues such as what happens if you fall out and part ways, or if someone unexpectedly dies are things to consider.

Wait for inheritance

Morbid as it sounds, one in five wannabe home-owners have said that their best chance of owning a home is to either inherit one through their parents, or through money in an inheritance. This is particularly the case if you are already in the rental market.

Looking to buy a home? Get a conveyancing quote by clicking here.

Get your fixed-fee property quote today