Buying a house is a distant daydream for many of us, as property prices carry on rising while wages stay the same.
It’s pretty much acknowledged that we’re in the middle of a serious housing crisis, giving young people the catchy moniker of ‘Generation Rent’.
But you don’t actually need to be completely loaded to get on the property ladder. There are a lot of schemes available for first-time buyers that can help, and in some parts of the UK it is actually cheaper to pay a mortgage than rent.
We spoke to Nick Barnes from Chestertons estate agents to get some tips.
1. Save money into a Help to Buy ISA
If you’re a first time buyer, the government will give you £3,000 towards the deposit on your home, for free. Handy.
The way this works is you save each month into a new type of bank account launching in December called a Help to Buy ISA. For every £200 you save towards a deposit, the government will give you another £50, up to a maximum of £3,000.
If you buy with someone else who is a first–time buyer they can use the scheme too, and you can pool the boost from the government to get £6,000, which has to be worth doing.
2. If you think you’re priced out for being single, consider buying with a friend or family member
The classic first-time buyers are a young couple starting their life together – but as people leave it later and later to get married, that’s just not an option for everyone.
It doesn’t mean they should feel like they’re stuck renting if they don’t want to be, however. Lots of people are now buying property with a friend or family member to spread the costs and pool income to get a mortgage.
Advertising account manager Jess Austin, 25, moved in with her parents in Kent after graduating from uni so she could save up for a deposit.
‘I never wanted to move out to rent – it is a big drain,’ she told metro.co.uk. ‘But it has got to the point where I want to purchase a property.’
‘I was with a longterm boyfriend and initially my plan was to move with him but that didn’t work out,’ Jess said. ‘I decided to look for a property with my older brother as a short-term plan for the next five years.’
She and her brother are now saving up to buy a house together, and will use the Help to Buy ISA with NatWest to try and build up £12,500 each.
3. Consider ‘shared ownership’ schemes
People who can’t afford a house outright have the option to buy just part of their property, and pay a smaller amount of rent on the part that remains. It’s a kind of halfway house to getting on the property ladder, with the option to buy more if your financial position changes. They are especially popular in new build developments and chancellor George Osborne recently lifted restrictions on who can put their name down for these schemes.
They’re not ideal because it may be more difficult to sell them on than a conventional property and you need to scope out any unexpected costs – for example, the maintenance charge for living in a new block of flats may be expensive.
However, they are definitely worth looking into to see if they could work for you.
4. Get a government loan
If you’re buying a new-build home and can raise a 5 per cent deposit, you can get a ‘Help to Buy’ loan from the government to pay for 20 per cent of it which you have to pay back once the property is sold.
In London, this rises to 40 per cent of the sale price – which is massive. For the first five years, the loan is interest free and the idea is that any increase in the value of the property will help you pay it back (although you will have to give the government a proportion of the profit).
Keep an eye out on hoardings outside building sites as companies may advertise their new homes are part of the ‘Help to Buy’ scheme.
5. Think hard about where you’re willing to live
London property prices rose by 10.6 per cent in the last 12 months (probably your salary didn’t) and average prices in the capital are now over half a million pounds.
But in many other parts of the UK you could actually get a mortgage for less money each month than rent, including a lot of areas in Scotland and the north of England (check out our guide here to see exactly where).
Nick said first-time buyers should bear in mind they will probably look to move again, and go for a property in an ‘up and coming’ area to make more profit when they sell on which will help them upgrade.
‘You have to think about whether a property will be saleable,’ he said. ‘Look at cheaper areas on the up, such as places where CrossRail is coming or where there is an urban regeneration programme.
‘It’s never been easier to find out how much average asking prices are, using websites like Rightmove and Zoopla.’
6. Be willing to negotiate
If you already have a mortgage in place before going for the house you want, knowing the terms can help you in negotiations, Nick said.
People may be willing to take less than the asking price if they want to sell quickly for any number of reasons, he added, ranging from divorce or a death in the family to redundancy or relocation for a job.
Try and develop a decent relationship with your estate agent so they are more likely to give you the scoop on which offer might be acceptable.
There are loads of websites out there offering advice. A lot of it is quite complicated – but take the time to get your head around it because it’s really helpful.
Your first stop should be the government’s own website which has the official info on the schemes above. The Money Advice Service also offers a ton of help from things like how a mortgage works to the difference between freehold and leasehold (you’ll want to know about that).
People in Greater London considering shared ownership should check out www.sharetobuy.com, which has details of properties on the market and information about who is eligible.