According to a Nationwide Building Society Study, the UK’s average house price is again on the rise, in real terms, having peaked in 2007. The average UK house price is now approximately 6 times the average UK salary at about £228,000. Of course, in London and parts of the South East of England, this is much higher.

How then, does a first-time buyer get onto the housing ladder?

Here we make a few suggestions;

Unless you are fortunate enough to have secured a significant deposit, it’s likely that you may need some help scraping together sufficient money to meet a significant deposit. Until recently, this would have been at least 10%, with most lenders not offering a 95% Loan to Value (LTV) option.

In April this year the government introduced a 95% Mortgage Guarantee Scheme. This is a temporary measure introduced by the government in reaction to the lack of 95% mortgages available in the market. The government will provide sufficient guarantees to lenders so that 95% mortgages can be offered again.

Another way to get on the ladder is by participating in the Government’s new Help to Buy Equity Loan Scheme. The scheme, which launched at the end of 2020 is available to first-time buyers only. Applicants must be buying a new property from an approved housebuilder.

Another route to getting on the home owning ladder is to buy just part of a property whilst renting the remainder at an agreed rent. Known as Shared Ownership, this reduces your borrowings and the deposit you need to save. It also enables you to buy more of your home at some time in the future, known as staircasing, or sell the home and use any increase in equity, over time, to use as a deposit for another home. 

Guarantor or Family Mortgages remove the need for the buyer to have any deposit at all. Instead, a family member will put a sum of money (for example 10% of the purchase price) into a savings account with your lender. After say 3 years, if all mortgage repayments have been met, the savings are returned, plus interest, to the family member. This is usually only available to first-time buyers and new homes, shared ownership or equity homes and interest-only mortgages are excluded. For more details, click here.

Whatever your circumstances, it’s worth having a chat with us. There are lots of ways first-time buyers are being helped by the government right now.

Related articles:

• New Help to Buy Scheme Launched
• The Government's Mortgage Guarantee Scheme Explained