For many young people, it seems like the property ladder keeps getting pulled up from under them. It’s harder than ever to secure your first mortgage, and house prices are rising considerably. Even the smallest mortgage deposit seems like an unfathomable amount of money.
Most are fed up wasting their hard-earned cash on renting. They want their own space they can decorate and make their own! So, how can young people get on the property ladder these days? Well, the bad news is that there is no easy answer here. A combination of hard-saving and intelligent financing is required.
Find a permanent, reliable job
The first step to getting on the property ladder is mortgage approval. Without a mortgage, you can’t buy your first house. Companies like the Northpoint Mortgage Lenders assess you and your personal circumstances to consider your viability.
They’re looking for an individual that can keep up with monthly repayments and handle the economic responsibility. One of the most important factors here is a permanent reliable job. If you can prove that you have a regular income, mortgage lenders will look at your application favourably.
Start building a deposit
It may take a number of years, but you’ve got to start somewhere. Begin putting money away from your paycheck every month and get into the habit of saving. The best idea here is to set up a monthly direct debit.
That will transfer a portion of your paycheck before you’ve had a chance to spend it! The more you save, the easier you’ll find it. No matter how early, it’s a good habit to get into when thinking about your financial future.
Clear your debts
Mortgage lenders will run your application through a credit checker. They’re looking at your credit history to determine your ability to repay debt. The first step to a clean and healthy record is clearing credit card debt and wiping your overdraft.
If you’re serious about getting on the property ladder, take a long, hard look at your existing finances first. Set up a timetable for paying outstanding lenders and give yourself a clean slate.
Speak to the experts
It’s always a good idea to consult the experts. They’ve been through the process before and they can advise the best course of action. The first person you should speak to is a mortgage advisor. They’ll help assess your current situation and give you a rough estimate of how much you could borrow.
They’ll also provide more specific advice for improving your chances of acceptance. Secondly, speak to an estate agent like Redmove. They’ll help you get a sense of what’s out there, and show you how far your money will stretch.
Housing schemes
There has been a big movement to help young people get on the property ladder recently. New schemes have been put in place to help people make that first step. Examples of these include the help-to-buy mortgages.
I’m on a shared equity help to buy scheme, where I own 57% of the property, and the government coughs up the cash for the other part of the house. This means I can afford a house, double the price I usually would, and my mortgage repayments are low! When I move, the house will go to someone on a waiting list, who will benefit from the same scheme!