Do you spend a major chunk of your earnings on the house rent and live under the impression that owning your house is a distant dream? If yes, then this is the right space for you. Today, we will discuss different options available to first-time buyers to convert their dream of homeownership into reality.
Challenges for first-time buyers
Research conducted by the Institute of Fiscal Studies shows that first-time buyers' average age in Britain has gone up to 30. The level of ownership amongst Britons aged 20-29 has reduced from 50 to 30%. Increasing prices and tightening of affordability models by lenders are the major hurdles for first-timers. The prices of houses are rising way faster than the salary of an average Brit.
Getting on the housing ladder
In recent times, there has been some good news for first-time buyers. No need to pay Stamp Duty Land Tax for a property valued under £300,000. The increased taxation on landlords has also pushed many properties in the market, which were the strongholds of investors and property dealers for years. Let us now check out the different options available for a first-timer to become a homeowner.
Option A – Saving Your Deposit
Let us start by assuming that you are a couple with both earning full-time (in case you are single, consider buying with a friend or relative). The average wage in the UK is £27,271. For this purpose, let us assume £23,000; hence, the combined earnings will be £46,000. With this, you will get a mortgage close to £185,000. If you have some savings, you can easily afford a house (1-2-bedroom standard apartment) between £190,000 and £200,000. You need to repay the mortgage at £770 pcm per month.
Option B – Help to Buy
This is a program launched by the government to help first-time buyers to purchase their homes. Since 2013, the government has spent almost £7.4bn to assist 150,000 buyers purchasing their own homes. How does this scheme work?
This is for properties priced up to £600,000.
You need to have savings equal to 5% of the property value. The government will give you an interest-free loan worth 20% of the property value.
This means you take a mortgage on only 75% of the property value against 95% compared to the earlier option.
This is a reliable and comprehensive funding scheme for all those looking to buy their own home. You can bet your dreams on this just like you can bet your money at the Spin online casino, assured of a fair deal. Online gambling cannot be better than at Spin Casino; similarly, the government cannot develop a better scheme than this to help first-timers.
Option C – Mom and Dad Bank
Many first-time buyers are turning to their parents to help them with the deposit. In 2017, parents spent £6.5 billion and were considered the 9th biggest lender in the country. Parents can shell some of their savings, release funds from their main residence (equity release), or go for family linked mortgages. There are multiple ways in which parents are supporting their children in becoming homeowners.