Studies have shown that the typical Londoner (for example) spends more than a third of their monthly salary on rent, and the widening gap between the amount paid to a landlord compared to what they could be paying for a mortgage is costing them £1,000 a year. Plus, keeping up with high rental payments means renters have little left to build up a lump sum towards buying their own home.
But, there is light at the end of the tunnel for any of you struggling to get on to the property ladder while trapped in a rising rental market. Craig Osborne, director at SiteSales Property Group, says it can be done – with some careful budgeting and by taking advantage of everything that might put them in a better position to achieve their dream of property ownership. Follow his tips to get that little bit closer to buying your own home.
1. Know what you need
The first step, says Osborne, is knowing the amount you will want for a deposit – and the associated costs of purchasing a house. 'A property on the market for £300,000 will require a minimum deposit of five per cent, or £15,000. But be aware there may be additional fees related to valuation, surveying, brokering, conveyancing and land registry.'
2. Have a savings plan
‘By being more frugal and informed on your choice of service providers and companies or brands that you use, and slightly adjusting your lifestyle, significant savings can be made. Creating spreadsheets or monitoring your spending with an app can help you identify areas where you can cut some costs. Set targets of savings each month as well as for the year.’
3. Make the most of available schemes
‘There are Government initiatives designed to give people a leg-up on to the housing ladder. Investigate whether you are eligible for Shared Ownership, Help to Buy and localised council versions of these schemes. Visit the government’s Shared Ownership website to investigate whether you are eligible.’
4. Consider your credit
‘Your credit score can tip the balance as to whether you are accepted or declined for a mortgage. There are many free-to-use online resources where you can obtain and monitor a copy of it. To ensure yours is in top shape, make all repayments in time, settle any outstanding debts at least six months prior to submitting your mortgage application and think carefully about what appears on the debit side of your ledger.’
5. Monitor mortgage offers
‘There is a host of mortgage products on the market that provide either variable or fixed rates. Explore what type of mortgage best suits your needs. If feasible, speak to an independent mortgage advisor to get impartial advice and options based on your individual situation.'
6. Be realistic
‘Owning a penthouse apartment in South Kensington in London, or a luxury cottage in Devon may be your dream but a pinch of pragmatism goes a long way in the housing market. By moving a little bit further out of major cities or choosing to buy in up-and-coming areas, you could potentially get more for your money. Areas undergoing major regeneration and infrastructural investment offer buyers a comparatively cheaper alternative to more traditional "aspirational" hubs.
'Buying a home is one of the biggest financial commitments you can make; get advice and understand what you are committing to. House purchases can sometimes take longer than expected for various logistical and legal reasons so you'll need patience.'