14 Oct GETTING ONTO THE PROPERTY LADDER

 
At the present time, it is estimated that the average age of a first time buyer getting on to the property ladder, is between 30 and 35 years.
Buying a property has historically been a good investment, since 1945, housing prices have increased faster than inflation and have also out performed the Stock Market.  This situation was correct, until the banking financial crisis of 2007, which has made financing and obtaining a mortgage more difficult, due to the tighter lending regulations, now in force. 
If you are renting, this is effectively dead money, an opportunity cost, so the sooner you take steps to get onto the property ladder, the sooner you will be better off, in the long run.
Here are some suggestions:-

• Save a Deposit.  Put money aside each month, as much as possible and as soon as you have a 10% deposit, then start looking for your home.  Some Building Societies can offer 95% mortgages, but these will be at slightly higher interest rates.  Remember, the larger the deposit, the lower the interest rate applicable.
• Borrow from Parents.  Depending on circumstances, this may be an option, your parents may even act as guarantors for your mortgage.
• Joint Mortgages.  This has become more popular with single people, to combine their income so that they can afford a mortgage.  The downside to this, is that you will only own 50% of the property and if you fall out with the co-mortgagee, this can cause a difficult situation.  A Solicitor’s legal document for future sale/settlement, is best sought, before finalising any joint mortgage purchase.
• Home Equity Scheme.  The Government has recognised the difficulty that many first time buyers are experiencing and have introduced the ‘Home Buy’ Scheme, which is Government funded, to help ‘priority’ first time buyers purchase a brand new, or Council/Housing Association property.  The benefits of this scheme include access to an equity loan, which does not have to be re-paid until the property is sold.  Visit www.direct.gov.uk.
• Reality Check.  Lower your expectations in the size and location of your ideal home.  Compromising on both, will enable you to obtain your mortgage equation sooner.
• Get a Lodger.  Through the Government ‘Rent a Room’ Scheme, you can earn £4,250 per annum tax free and you do not need to prepare detailed accounts.  This will assist you in financial running expenses, in the early days.  The down side of a lodger, is that you lose your privacy, but if it is a friend, then it can be an acceptable option.  You must inform your Home Insurance Company, if you consider the ‘Rent a Room’ Scheme.