Jane McGowan finds out whether government schemes and stamp duty changes have made life easier for first-time buyers...
Buying your first home is one of life’s milestones. In days gone by, it may have been the next step following a wedding or securing a permanent job. And it would almost certainly have occurred while you were in your mid-20s.
Not so today. According to the latest figures from the Halifax Building Society, most first time buyers are aged between 32 to 34 and are joint owners with an average income of £35,000. Not only are they much further into their careers, but many have signed up to longer-term loans in order to afford the desired amount. Newer entrants to the market may also be burdened by a significant student loan. Many more will be reliant on the ‘bank of mum and dad’ in order to secure the deposit.
Last year, the Government took steps to get people on the property ladder by axing the charge for properties under £300,000. So could this measure, along with the recent dip in house prices finally signal some good news for first-time buyers?
“I would say the change has helped those who were already in a position to buy,” says Julia Cooke, PR manager for Bewley Homes. “I don’t think it has made buying a house more accessible for most people. You are still having to find thousands of pounds, which is tough.”
There are options open to those looking to own their own home and many deals to be had through help-to-buy schemes directly with developers or through local housing associations.
Help to buy, which was launched in 2013, enables the buyer to find 5% of the 10% required deposit (the other amount up to 20% is funded by the government – which you are required to pay back separately at a later stage). It applies to new homes valued at up to £600,000, and while not strictly restricted to first time buyers, it is only available to people who do not already have property equity.
“Help to buy has made a huge difference,” Julia says. “It means people can stretch a bit further. Whereas before they may have been looking at a two-bedroom apartment, they may now consider a three-bedroom house, which future-proofs them to some extent, as they may stay in the property longer term.”
So what are the basic principles of buying your own home? In the first instance, make sure your finances are in place. Although this sounds basic, there are many things you need to factor in. As well as a deposit (usually around 10%), you will also need to cover solicitor fees, local land searches, building surveys and moving costs. Every mortgage provider offers something different, so make sure you check out any deals – such as fees paid or cashback – before you commit. It’s worth shopping around as you will be paying the loan back for a long time.
Decide whether you want a flat or a house. While this may sound obvious, it may be worth spending more on a more substantial property to avoid selling up in the near future and encountering a whole array of further costs.
Location, location, location – yes it’s a cliché, but it is also very important. For example, are you prepared for a lengthy (and costly) commute to secure your dream home? Is a one-bedroom central London apartment the right choice if you are planning a family in the near future?
For advice, visit: moneyadviceservice.org.uk
