First-time buy­ers need to save long and hard

The av­er­age first-time buyer de­posit in York­shire is now £19,462, so sav­ing cre­atively is cru­cial, says Sharon Dale.

Yorkshire Post - Property - - PROPERTY NEWS -

NEW FIG­URES from the Hal­i­fax show that the av­er­age age of the first-time buyer in York­shire has crept up from 27 in 1983 to 29 to­day.

It doesn’t sound so bad com­pared to the av­er­age age in Lon­don, which is now 32, but there are still enor­mous hur­dles for those try­ing to scram­ble onto the prop­erty lad­der.

Rais­ing a de­posit and se­cur­ing a mort­gage are the big­gest is­sues. The av­er­age first-time de­posit in the UK has dou­bled over the last 10 years and now stands at £32,321 with a four-fold in­crease to £100,000 in Lon­don, ac­cord­ing to the lat­est Hal­i­fax First-Time Buyer Re­view. In York­shire, it is £19,462, which is an av­er­age 14 per cent of the prop­erty pur­chase price and an enor­mous sum to save given that the av­er­age salary in the re­gion is £24,500.

The av­er­age first-time buyer house price in York­shire has risen to £135,719, while the UK av­er­age is over £200,000 and stands at a record £400,000 in Lon­don. This in­crease has led to a grow­ing trend to­wards longer mort­gage terms. In 2006 only 36 per cent of first-time mort­gages were over 25 years. Now, 60 per cent have breached that thresh­old with over a quar­ter of buy­ers opt­ing for a 30 to 35-year pay­back pe­riod.

The good news is that hav­ing reached an all-time low of 192,300 dur­ing the credit crunch in 2008, the num­ber of home­buy­ers get­ting on to the first rung of the prop­erty lad­der has grown by 75 per cent to 335,750 in 2016. How­ever, num­bers re­main 17 per cent be­low the 402,800 in 2006.

The statis­tics are proof that to­day’s first-timers have to be both cre­ative if they want to own a home. An­drew Frost, 26, who works in marketing, saved for a mort­gage de­posit for al­most two years and by Fe­bru­ary last year he had the keys to a three­bed­roomed ter­raced house. The prop­erty cost £92,000 and he put down the 10 per cent de­posit of £9,200 on a joint mort­gage with his part­ner.

“It was my am­bi­tion to own a house by the time I was 25. I got a job in 2013 af­ter I fin­ished univer­sity and then I lived at home un­til I saved enough for a de­posit on a house. I am lucky that my par­ents let me live rent­free, which ob­vi­ously helped,” he says.“I put money into a sep­a­rate sav­ings ac­count each month and still had enough to go out and en­joy my­self. I just didn’t buy any

FIRST STEPS: un­nec­es­sary lux­u­ries like a flash car and when­ever I wanted to spend I had to think whether it was some­thing I re­ally needed.”

An­drew’s mort­gage is £470-a-month, which is cheaper than the £495-a-month rent for sim­i­lar prop­er­ties in the area. “I re­ally didn’t want to rent as it’s a waste of money,” says An­drew, who has made im­prove­ments to his home and is al­ready think­ing about tak­ing the sec­ond step on the prop­erty lad­der.

Here are some more first-time buyer tips:

Get a Help to Buy ISA:

This is free money. For ev­ery £200 saved in the ISA, the gov­ern­ment adds a bonus of £50. The max­i­mum bonus on sav­ings is £3,000. If there are two of you buy­ing to­gether, you are both en­ti­tled to a Help to Buy ISA. To qual­ify for the 25 per cent top-up, you need to have saved at least £1,600.

Cre­ative sav­ing:

Do you need to eat out so much? Can you take a sand­wich and a cof­fee to work in­stead? If you spend £5 on lunch five days a week – it adds up to about £1,000-a-year. Lots of lit­tle sav­ings like this add up but don’t let them lan­guish in your cur­rent ac­count. Take them out when you get paid and put them in the afore­men­tioned ISA. Rent is prob­a­bly your big­gest out­lay so in­ves­ti­gate mov­ing some­where cheaper or back in with par­ents. If you don’t mind rough­ing it a lit­tle then con­sider be­ing a prop­erty guardian for Ad Hoc. Rents in­clud­ing bills are as lit­tle as £250 a month. Ad Hoc spe­cialises in cre­at­ing tem­po­rary homes in empty build­ings to make them less of a lure to thieves and van­dals, www. ad­hocprop­erty.co.uk

If you can’t af­ford a home in your de­sired area then look to the fringes. Es­tate agents will be happy to ad­vise on this.

If you buy new, you can take ad­van­tage of the Help to Buy eq­uity loan scheme. This sees the Gov­ern­ment lend you up to 20 per cent of the cost, in­ter­est free for five years. So you only need a five per cent de­posit and a 75 per cent mort­gage. www. help­to­buy.gov.uk

Lo­ca­tion:

Buy new:

Tak­ing a dis­ci­plined ap­proach to sav­ing can add up to great ben­e­fits when it comes to buy­ing your first home.

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