Getting on the property ladder used to be hard, now it is next near impossible or so we are told. This needn’t be the rule, if you are informed enough it is possible for those even on a modest salary to get on the ladder.
Every day we turn on the news to hear of the rising ages of first time owners, with some surveys suggesting people will be soon average over 50 in some areas before they purchase their first home. So what can you do to get into the housing market?
To get a mortgage you will have to meet a certain number of criteria, statistics from the Council of Mortgage Lenders suggest that first time buyers need 24 per cent of their house or property cost before they can get a mortgage. Being able to put a quarter of the housing price down will mean that you can get the best possible deal on a mortgage.
For many this will mean going to the bank of mum and dad for a loan. If this option is not available there are a number of other options available to first time buyers.
To get a mortgage in the first place you will need a good credit rating. Make sure you pay bills the moment they come in and make sure you don’t forget to pay or miss payments as these are all black marks on your rating. It is common for people who have missed a payment to be denied a loan.
Also even if you are not looking for a mortgage, put a few pounds of every week’s wages into a savings account with the institution you wish to borrow from in the future. This saving will allow you to build up a good relationship with the bank and improve your credit score.
Currently interest rates are very low, actually at a low point historically. When taking out a mortgage take this into account and do the calculations of what you will have to repay if interest rates shoot up by 1, 3 or 5 per cent. This will mean you can calculate the worst possible scenario and whether you can afford to take a loan out should it happen.
When buying a home decide on whether you want a new or a second hand home. Second hand homes can offer huge potential for refurbishment and also gain in price. Though, they may need a lot of investment along with the basic price and also may suffer more structural and maintenance problems long term than new homes. Buyers of second hand homes spend £7,700 on average in the first year after purchase according to money.co.uk.
New homes come with a 10 year guarantee from the NHCB and are also more energy efficient, however you may have to sacrifice character for practicality, though you save on maintenance.
You also need to take solicitors fees and other costs into account .These can be set off if you decide on renting a room in your house. Many people can gain up to £4000 or over a year by renting out a room in their property.
Whatever you decide on it is always good to know how best to go about buying a new home and how to get a mortgage; the earlier you start paying one off the earlier you finish.
Disclosure: Susan Kennedy writes on behalf of Ulster Bank, who are a provider of first time buyer mortgages.