Kirstie Allsopp made headlines recently after claiming that youngsters can buy a house if they simply give up coffee, gym subscriptions and Netflix. To say the comments have been received as controversial is an understatement.
Whatever your viewpoint is, there’s no denying that it is more difficult to make that first step onto the property ladder today than it was perhaps ten, twenty, thirty years ago. House-price-to-income ratios are currently at a historic high, leaving first-time buyers struggling to raise deposits.
Unfortunately, there isn’t a quick fix to making that first all-important step onto the property ladder, however here are a few things that you can try to give yourself the best chance of success.
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Improve Your Credit Score
A good place to start is your credit score. A squeaky clean credit score can have a really positive impact in trying to secure a mortgage and similarly, a poor credit score can make the mortgage process so much more challenging. This is because mortgage lenders look into your credit history as a way to assess your affordability and see how reliable you have been at paying back debts and loans in the past.
Whilst it can be possible to secure a mortgage with bad credit, it will often come with a higher interest rate. You may even need to put down a larger deposit of say 20-25%. Mortgage lenders sometimes require this as a way to limit their risk.
To improve your credit score, make sure that you keep on top of your financial commitments and repay any loans, credit cards and utility bills on time and in full. It’s also wise not to apply for any finance whilst you are saving for your house deposit.
Make sure that you are on the electoral roll and that all your personal details are correct. And speaking of making sure details are correct, check your credit score regularly. Errors can happen, so if something doesn’t look right then make sure you check with the relevant creditor.
Shared Ownership Scheme
There are a handful of government schemes out there specifically designed to make homeownership easier for those struggling to raise deposits or those on lower incomes. One of the most popular schemes is the shared ownership scheme. It’s been around since the 1970s and is only gaining in popularity today.
Shared ownership is a cross between renting and buying. You buy a percentage of a property and a housing association owns the remaining percentage. They then charge you rent on this remaining percentage, and you have a shared ownership mortgage against the percentage that you own. So for instance, if you purchase a 25% share of a property, you only need a mortgage and deposit for the value of this percentage – which is bound to be much lower than a deposit when purchasing the traditional way. Who knows – you may even be able to purchase a much bigger property in a more desirable area by using the shared ownership scheme.
Speak To A Mortgage Advisor Or Broker
Remember – mortgage advisors and brokers are there to help. It’s literally their job! You don’t have to be in a position to take out a mortgage to be able to speak to one. Just sitting down and going through your finances and getting some advice on setting realistic goals can be really helpful and set you in good stead.
When looking for a mortgage advisor and broker, it’s a good idea to ask around and get some recommendations from any friends or family that have used one. Alternatively, I can recommend Mortgage Light. They are based in Milton Keynes but always willing to speak to anyone, no matter where your location, to offer advice and guidance for anything mortgage-related.
Be Realistic In Your Property Search
Speaking to a mortgage advisor and broker can also help you to be realistic about what kind of property is going to be within reach. They can go through your incomings and outgoings with you and discuss how much per month you’d be comfortable spending on a mortgage. This can be pretty difficult to know as a first-time buyer.
Crunching the numbers with a mortgage advisor will give you a price range in which to go away and house hunt within. Otherwise, you might be setting your sights on a four-bed detached property when your budget would better suit a three-bed semi-detached.
Getting on the property ladder at the moment is really tricky, there’s no denying it. However, there are schemes and companies out there that can make it easier for you. Best of luck!
good tips!
lots of great tips