Getting on the property ladder .

 

 

Getting on the property ladder in the south of England can be very hard for first time buyers, especially if young and have only been employed or self employed for a few years. Also due to the current economic environment lenders are asking for larger than normal deposits, for non help to buy mortgages you are looking at 10 to 15% deposits currently.

With average property prices in the South of England flats are around £170,000 plus for 1 bedrooms and house’s are  around £300,000 the income needed if you had say a 10% deposit would be examples below.

Flat  priced at £170,000 minus 10% deposit =£153,000 mortgage needed the average multiplier is 4.5 times income single or joint an income off £34,000 would be needed , if it was a couple buying their first home the income needed is achievable jointly for this price ranged flat .

House priced at  £300,000 minus 10% deposit would leave a mortgage needed £270,000 divided by 4.5 =£60,000 if it was a joint mortgage the £30,000 income needed for each applicant is achievable , but if it’s a young single applicant this a large income needed to qualify for what is just an average house in today’s market .

House’s in the North of England are more in line with achievable incomes for a first time buyers house and are averaging around £145,000 in the North of England with flats around £66,000 so for the same examples income needed as below, although the average income is lower in the North of England compared to property prices the income gap to buy a property in the south is far larger and the deposit needed due to lower prices is far less.

 Flat £66,000 minus 10% deposit =£59400 mortgage needed the average multiplier is 4.5 times income single or joint an income off £13200 would be needed , if it was a couple buying their first home the income needed is achievable jointly for this price ranged flat in the North of England  .

House £145000 minus 10% deposit would leave a mortgage needed £130,500 divided by 4.5 =£29,000 income needed single or joint, as you can see the difference between prices in the North and the south are very significant.

So in summary without help it is easier to get on the property ladder the further north you go, but if your work is in the south or most of your family live in the South then there are some other ways you can get on the property ladder as below.

First-time buyers can apply for new Help-to-Buy: Equity Loan (2021-2023) scheme from 16 December 2020.

The new Help to Buy loan from Homes England allows first-time homebuyers who are eligible for an equity loan to borrow up to 20% (40% in London) of the purchase price of a newly-built home. Customers pay a deposit of 5% or more and arrange a mortgage of 25% or more to make up the rest.

Buyers will not be charged interest on the equity loan for the first 5 years. Interest fees start at 1.75% and rise each year in April by the Consumer Prices Index (CPI) plus 2%. Buyers pay a monthly management fee of £1 for the life of the equity loan.

Homebuilders are getting into contract for the new scheme and starting to market their new build homes. Buyers are advised to check with their homebuilder that they are registered for the scheme before applying.

Eligible first-time buyers will be able to reserve their homes from mid-December and get the keys to move in from 1 April 2021.

Mortgage options for parents who want to help first-time buyers If you want to help your child buy a home but don't have enough savings to give or lend them the cash, there are several options you can consider. Guarantor mortgages A guarantor mortgage involves you using your savings or your home to help your child get a mortgage. By putting down money or property as collateral, you'll be able to reduce your child's risk profile, making it easier for them to get a home loan. The drawback with guarantor mortgages is that if your child defaults on their mortgage payments, you'll be responsible. Guarantor mortgages also often come with higher rates than traditional deals.