The UK housing market is in a unique state at the moment, born of unique circumstances. For first-time buyers across the country over the past decade, buying that first property has proven harder and harder – at first, thanks to the fast-rising value of properties precipitated by increased demand, then due to the Bank of England’s efforts to curb inflation.
Even as property values begin something of a precipitous descent, high mortgage rates continue to make things difficult for first-time buyers. Financial concerns are the least of it for those truly new to house-hunting, too! What are some essential considerations, financial or otherwise, when gearing up to get that first foot on the property ladder?
Saving for a Deposit
The first and most immediate priority for the first-time buyer is to ensure their deposit money is in place. Deposits are essential for securing a mortgage, and hence your bid on any given property. The larger your initial deposit, the less your lender would have to pay, and the less you would pay back as a mortgage-holder – which can translate to lower monthly payments, longer repayment terms or even a higher property value.
There are many ways to approach saving up for a deposit, but arguably the most efficient way would be to open a LISA, or Lifetime ISA. These offer up to 25% annual interest on deposits, up to a maximum of £1000 per year; this can be redeemed only if the money withdrawn is used to purchase a first home, or fund retirement. For many, it represents the best returns on savings bar none.
Buying a New Build
There is also the matter of which kind of home to invest in. With older homes in high demand, and often being snapped up by property developers or investors, new build homes have become the more accessible option for many.
A range of new build homes from different developers have been made solely available to first-time or residential buyers, allowing direct and unfettered access to the market. New builds are a mixed bag though, where modern convenience and better energy efficiency meet the potential for lesser quality and smaller physical footprint.
Getting a Mortgage
The act of getting a mortgage is a little more complicated than securing an initial deposit. Indeed, there are some cases in which a deposit may not even be required. Mortgages come in different shapes and sizes, necessitating some fresh decision-making in order to avail of the best deal for your situation.
0% mortgages are available, which lend the full value of a property based on comprehensive personal financial information. These are much higher risk for you as a buyer, though; if property values fall early after buying, you could find yourself in negative equity – essentially, paying more than the worth of the property. Shoring up as much of a deposit as possible, and resolving to pay the mortgage as early as possible, is the safest route to ownership.
A customizable subscription slide-in box to promote your newsletter
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.