Advice from the experts: Buying your first home

Kate Faulkner, Managing Director of Designsonproperty.co.uk and Propertychecklists.co.uk shares some top tips for first time buyers looking to get on the property ladder.

Buying and owning your own home is an amazing feeling, but for many it can feel unaffordable, especially when it’s often reported the ‘average’ property price is eight or more times the ‘average’ salary.

The good news is, when it comes to property, ‘averages’ rarely tell you the truth about affordability, especially in your local area. Part of the reason for this is because the government offers some great schemes, which even in more expensive areas, can make buying a home more affordable than you think.

One of these is “Help to Buy Equity Loan” for new builds, and worth considering if you can afford the mortgage but struggle with a big deposit. This scheme enables you to buy a property with a 5% deposit. The government tops up your deposit with a five-year 20% (40% in London) interest free equity loan, so you buy with a 75% (55% in London) loan to value, giving access to competitive mortgage rates. From 1 April 2021, this scheme is open only to First time buyers.

And, if the 5% deposit still seems an impossible task, the government’s Lifetime ISA scheme, will contribute up to 25% for first-time buyers under 40 towards your own savings, which you can use towards the purchase of your first home.

If the deposit and mortgage seem unaffordable, Shared Ownership is worth investigating. Here, you buy a ‘share’ of the property, which will be from 10 – 75% of the actual value with the government’s new standard model. You pay rent on the remainder and can buy more as your wealth increases. This scheme supports your need to live in an area for a particular reason, e.g. access to childcare or work out of hours, and, you can use the LISA scheme to build your savings for the deposit you need to raise.

There is also an Older People’s Shared Ownership (OPSO) scheme, aimed at those aged 55 or over, where you don’t have to pay rent on the rest of the property when you own 75%.

If these schemes appear more affordable, the next question I am asked is: ‘is now the right time to buy’? This answer is always ‘that depends’!

Over time we have become a little obsessed with making money from property, rather than just putting a roof over our heads. This makes buyers try to ‘guess’ when the market will rise and when it might fall, hoping to ‘bag a bargain. In reality, it’s not always just about the price you pay, it’s also about the cost of putting a roof over your head, finding the right property and whether your own financial/personal circumstances are stable enough to own a home for the next 5-10 years.

Recently, many have re-evaluated their property requirements with outdoor space and home offices shooting up the list of needs! Whatever value property you buy, compromise is always required. If you want outdoor space, can you secure a flat with a balcony and great views or could communal space or a nearby park suffice? If you need a home office, there are some incredible ways of incorporating one into your home, a property is essentially a ‘box’ and it’s down to you how to design the space to deliver what you need.

Buying a home has never been easy, I bought with a friend in the 1990s because I couldn’t afford to get on the ladder myself and although the deposit was ok, mortgage rates were in double digits.

So, don’t let scary headlines about affordability put you off at least investigating what options are available in your local area. It may be, with the support of the government schemes, you can afford your own home.