It’s hard for first time buyers to get on the property ladder right now. High property prices mean there is a real shortage of property within a first time buyer’s budget. And the hot property market of late means that first timers have often lost out to those further up the ladder. The end of the Help to Buy scheme, coming up soon, could present another hurdle to those wanting to buy their first home.
With that in mind here are some tips that could help would-be first time buyers get onto the property ladder:
Move out of your comfort zone – consider other areas. By being willing to move out of an area you know and look at other areas you could get a much cheaper property, or a much better property for your budget, or even both!
Using a property price heat map, like that from PrimeLocation, can help you spot better value areas nearby that you might not have considered before. They could actually be just a short walk or drive from your first choice area.
Think carefully before buying a new build. A new build can be very appealing for your first home. And new build developers are very keen to sell their homes to first time buyers with lots of glitzy marketing and tempting incentives. But new build houses and flats usually sell at a premium, even after buyer incentives are taken into account.
If you’re planning on buying a new build always compare prices with those of similar resale properties. You may find you can buy a resale for significantly less, making getting on the ladder a bit more affordable.
Look for the ugliest houses. Houses that don’t have great kerb appeal often don’t get as many viewings nor as many offers. So you may be able to get much better value for money.
Another good reason for buying an ‘ugly house’ is that they often have great potential to add value to and make some money too!
Look for an income-generating property. Consider buying a property where you could rent out a room or rooms to produce an income. Although most don’t, there are even some mortgage lenders who will take into account room rents you can earn as part of a mortgage application. (These are sometimes known as rent a room or lodger mortgages. You will probably need the help of a mortgage broker to obtain these.)
Buy future potential. Improve affordability by looking for a smaller house than you actually want. BUT make sure it has potential to be extended and improved in future. For example, by adding an extension or a loft conversion.
This way you can save money now by only buying the space you need now. Then add more space a few years down the line when, hopefully, your finances will have recovered from buying.
Find the cheapest mortgage. There can be hundreds (and possibly even thousands) of pounds difference between the annual repayments on the cheapest mortgage available to you and the most expensive. This can be the case even when the difference in the interest rate between them seems quite small. Shop around and consider taking advice from a mortgage broker.
Consider buying at a property auction. Auctions have a reputation of being a place where you can buy good value property. Property sold at auction sometimes sells for below market value, ie. less than you would find it for on the wider market.
Auctions are sometimes thought of as being only for experienced buyers and investors but there is no reason why first time buyers cannot buy at a property auction. Many auctions today are even online, so it’s easier than you might think. You’ll still need a 10% deposit as with a normal purchase but at auction that 10% could go a lot further.
Just bear in mind that when you buy at a conventional auction the sale must be legally completed in (normally) 28 days. So you’ll need to have your finance sorted out in advance.
Exploit the fact that you are a first time buyer.The recent hot property market has been the exception but, normally, first time buyers are very attractive to sellers. Since you don’t have a property to sell the sale is likely to complete quicker and is less likely to fall through.
In the current market trying a cheeky offer as a first time buyer could be well worthwhile.
Watch prices very closely this year. Many experts feel that house prices will fall this year. See some of their forecasts here. But it’s not unlikely that once prices start to fall buyers will start to buy again and so prices could start to firm. So keep an eye on how property prices are moving and try to buy at the bottom of the curve.
There are several websites where you can keep tabs on how house prices are moving. Take a look at Home Owners Alliance House Price Watch.