First time buyers and getting onto the property ladder

October 31, 2023


Image via Flickr

Since the financial crash back in 2011, it’s been a very difficult and frustrating time for first-time buyers to get a foot-hold on the property ladder.  In a strange twist of fate, it was the gung-ho attitude of mortgage lenders pre-2011 that ultimatly led to the financial crash and the difficulties that first-time buyers’s face today while trying to get on to the property ladder.

The main reasons for this difficulty are, that there are 98% less mortgage products available today as compared to pre-2011, the criteria for approving applications are much more strict and the average deposit is now an eye-watering 30% - which is over £35,000 for your average first time buyer.

Many  rightly feel more than a little aggrieved, as raising this kind of money is very, very difficult and is not always a good measure of whether someone can responsibly afford a mortgage or not.

These days around 18% of 18 to 34 year olds are asking for help from the bank of mummy and daddy.  Not everyone has access to a bank of mummy and daddy and for them there are really only two options; take out an unsecured loan or just save.

Around 16% of first-time buyers are considering taking out an unsecured loan to pay for their deposit, but this is a worrying trend.  If your mortgage provider found out you were planning to pay your deposit with an unsecured loan, your application would be declined, as this would be considered a 100% loan.  Interest rates on unsecured loan tend to be quite high, so it really doesn’t make financial sense to fund your house purchase in this way.

Really the only sensible way to get onto the property ladder is to bide your time and save up for a deposit.

A deposit is only one of a myriad of costs faced by any house buyer. There are many other cost’s to be considered too, like stamp duty, solicitors fees, removal vans, utility bills, furniture, renovation and decorating costs.  You really should try and make a detailed analysis of how much money you have coming in and how much you can realistically afford, including a budgeted buffer to pay for unseen costs like emergency roof repairs etc.

Don’t let your heart rule your head.  Research a property properly and make decisions based on solid financial information.  Buying a house you love, but can’t sustainably afford is a recipe for disaster.

There are a few other schemes that can help you get on the property ladder; check out the governments Firstbuy scheme or shared ownership scheme, both of which will help you get on the property ladder without having to save up a huge deposit.

Fundamentally there is no easy way onto the property ladder.  The best advice is to wait, save up a deposit and look carefully for the right house.

Have you recently bought a house, or are you still looking for one? We’d love to here about your experiences in the comments below.

Related posts:

  1. Local Councils help out first time buyers
  2. No chance of getting a step in the door for first time buyers
  3. The perils of the property ladder: has anyone noticed the silence?
  4. FSA to tackle lack of financial knowledge in the UK - about time too.
  5. Choosing a different kind of security
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