2013: the year of the first time buyer?
January 24, 2013 at 3:13 PM Lawrence Hall 3 comments
4 bed detached house, Morecambe, Lancashire £228,995 – through Persimmon
Jessie Hewitson takes a look at whether 2013 might be the year first-time buyers return to the market.
First-time buyers, welcome back to the property market. While it’s still not easy to make the huge step from reluctant parental home dweller or renter to homeowner, newly available loans for those with 5 or 10 per cent deposits are helping. This is resulting in more first-timers owning homes: the Council of Mortgage Lenders this month reported an 8 per cent rise in loans given to first-time buyers.
Whilst 90-95% loan to value mortgages can help you get a foot on the property ladder, it’s important to ensure that you can afford the monthly repayments and start paying off your mortgage as soon as you can.
So if 2013 is your year to buy a home, here are some suggestions.
If you’re renting a property you like, Julia Inglis, of Finders Keepers rental agency, recommends asking your landlord whether he or she is looking at putting the property on the market. “It happens a lot – sometimes landlords are reluctant ones who couldn’t sell in the downturn, or they may want to free up some money for another investment or retirement,” she says. “If the property has been good for you and has no structural or maintenance problems, noisy neighbours or dirty communal areas, you know it’s a good buy. It’s a tried and tested proposition. And if it’s furnished you can usually get the furnishings included. There is also the bonus that on completion day you just come home as usual, but it’s yours.”
And don’t forget about the government’s New Buy scheme, which allows first-time buyers to purchase a new build property with only a 5 per cent deposit.
Ed Mead, of Douglas & Gordon estate agency, also recommends not wasting time with dozens of agents. “Find one who you get on with and offer him or her a buyer’s commission,” he says. “If you can pay them 1 per cent of the price, you will get access to all of the best properties. In time you will forget the 1 per cent, especially when you end up buying your dream home.”
Finally, a point that can seem a bit counterintuitive to those who don’t like to get in debt and we’re not suggesting this is for everybody, but get a credit card (making sure you pay it off each month and on time, to avoid interest payments) a few months prior to making a mortage application.. If managed carefully and sensibly, this can actually help you get “credit reputation” which ultimately can help secure a mortgage. Having a credit track record can aid your mortgage application. Someone with no credit history – perhaps someone who has only used debit cards – may be extremely prudent financially, but to a bank they may seem an unknown quantity.
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1.
The Planet | January 24, 2013 at 5:18 PM
I’m not sure it’s wise to encourage FTBs to borrow at 90-95% – depends where, of course: but prices are still vulnerable in quite a few places so caveat emptor on that one I’d say. As for the New Buy Scheme – well, to me this looks a bit like a subsidy to the building sector (and a way to boost economy) ….some might argue it keeps new build prices inflated and (odd coming from a Tory government) stops the market finding its own level.
2.
Lawrence Hall | January 24, 2013 at 8:05 PM
Thanks Mike – we have actually now added in a line regarding the LTV/borrowing level.
3.
Matthew | January 25, 2013 at 11:33 AM
What I did, many years ago now, was to buy a house and then improve it as it was a shell. Now I realise that these sorts of houses are difficult to find nowadays, there are still one or two, and as my house was near to a university, I had plenty of students wishing to share the house, who were there for the longest time, three years and mostly went back to their parents at times they were not studying. I do realise that now conditions are vastly improved for student lets, but one may be able to obtain help with any improvements necessary, from the students themselves, and educational establishments will bend over backwards to help, as they are always in need of decent housing for students. Could this be a method of helping youngsters to ‘get on the ladder’?