Recent news reports have highlighted how getting on the property ladder has come to seem an impossible dream for many.
Official Government figures now suggest that first time buyers need to scrape together an average of £23,000 to get their first mortgage.
This is based on buying an average ‘entry level’ £140,000 house, for which you would need to pay £300 in stamp duty, £21,000 for your 15% deposit and approximately £2,000 in moving and legal costs.
The ONS has now launched a new affordability calculator that enables first time buyers to quickly discover the savings and average household income required to buy a house in their chosen area.
There’s no doubt that getting on the property ladder is harder than it was a decade ago. But it does not have to be impossible, says Alun Thomas of Mallard.
Here are his tops for making your dream of owning your own home a reality:
- Work out how much you need to buy a house in your chosen area. The ONS affordability calculator can help you.
- Calculate how much you would need in total to get your first mortgage. This includes not just your deposit but also stamp duty, mortgage arrangement fees and legal fees.
- Talk to an independent financial advisor: they can help you work out how much you can borrow and what amount of deposit you would require.
- Set up a savings plan: work out the maximum amount you can afford to live without each month and transfer it directly into your savings account on payday.
- Open a Help to Buy ISA – a government-run scheme that can boost your savings by 25% up to a maximum government bonus of £3000.
- Look for ways to maximise your savings. For instance, a third of people saving for their first house move back in with their parents.
- If you can’t quite afford to buy 100% of a home, the Government’s Help to Buy: Shared Ownership scheme may be for you. Available only on new build homes, it enables you to buy between 25% and 75% of your home’s value. Later on, if your financial situation improves, you can buy bigger shares.
- If saving up for a deposit seems impossible, another helpful Government scheme is the Help to Buy: Equity Loan, through which the Government lends you up to 20% of the cost of your newly built home, so you only need to find a 5% deposit, and a 75% mortgage will make up the rest.
- Speak to an experienced estate agent who can point you in correct direction to find properties that will suit you and give you advice on how to proceed.
- View lots of properties to get an idea of what you can get for your money.