Getting onto the Property Ladder as a First-Time Buyer

3 June 2019

Investing in your first property is always an exciting venture and a step towards your future. However, amid the housing shortage and financial crisis of 2008, first time buyers have struggled over recent years to save for the hefty deposits and get onto the property ladder as early as their parents. Housing is now on average fifteen times more expensive than it was 40 years ago, making millennial’s the most disadvantaged generation to afford a home.

For young people buying a home has become far less of a priority with many writing it off as unachievable and other life goals such as travelling and having children ranking much higher in their aspirations. In response to this the UK government has put new plans into action to aid first time buyers onto the property ladder with smaller deposits, more affordable loans and alternative schemes. With a range of varied strategies out there from shared ownership in London to help to buy in Manchester, it is essential to know all your options and the pros and cons before settling on a home for you and your family.

Shared Ownership

This new scheme has become popular in recent years with the smaller deposits and a manageable mortgage that comes with the part buy, part rent strategy. Shared ownership works by allowing the buyer to own between 25%-75% of a home while renting the rest at an affordable cost. The portion of the home that you rent is owned by housing associations, who only provide affordable and fair priced properties as a non-profit organisation. This is particularly beneficial for anyone who is first time buyer in London but can’t justify the extortionate rental costs and rising house prices.

With shared ownership, you will also only pay a 10% deposit on the portion you are buying and no one can outbid you for a house should you choose it. For example, for 50% of a £200,000 home you will pay just £10,000 deposit rather than the £20,000 without the scheme. This will leave you a mortgage of £90,000 in which you can choose the best repayments suited to you.

In addition to this, you can buy more of your home over time through staircasing and in some cases eventually own your home outright. This can be done with as little as 10% instalments each time, effectively allowing you to move up the property ladder without moving anywhere at all. Shared ownership is perfect for anyone looking to invest in their first home but at a pace suited to you and your finances.

Help to Buy

For those whose primary obstacle is the deposit, Help to Buy offers high quality housing in a range of areas with a financial deal suited for those who may not necessarily have a lifetime worth of saving put away. Help to Buy is offered on a variation of homes from city apartments to bigger family homes and in sought after areas as well as new and upcoming locations all over the UK. These homes are new builds and will ultimately belong to you completely so you are free to personalise it in any way you please.

The scheme works by allowing you to pay just 5% deposit while being given a 20% equity loan from the government. The loan has no interest for 5 years so you can relax while you settle in and get used to your regular payments. You will be left with a mortgage of just 75% which seems a lot more comfortable than the regular 90% most buyers are faced with.

So if you’re feeling a little short of options as a first time buyer, know there are plenty of options out there. From shared ownership in Berkshire to houses for sale in Harrow, you can get your hands on your first home without feeling swamped by cost.

Jonathan Rolande

Jonathan Rolande (MNAEA MICBA MARLA) began in the property business in the late 1980’s and is a Director of House Buy Fast and helped to found The National Association of Property Buyers in 2013. He has worked closely with The Property Ombudsman to develop a Code of Practice for Residential Property Buying Companies.