Realism and clarity are obstacles one and two
Owning a home. It’s one of those life milestones most of us aspire to hit but the reality can be daunting and disheartening.
Especially now. The maths, sacrifice and money involved in buying a home are eye-popping in good times. Add uncertainty, volatile rates and a cost-of-living crisis and it’s no surprise that UK first-time buyer numbers have plummeted by 11 percent.
Well over half of Britain’s aspiring first timers say they’ve delayed their bricks and mortar plans due to the dodgy economics of the moment. Interestingly, in 2007 the average first-time buyer was 30 but today they’re 34 and getting older all the time …
Do the math(s)
All may seem dreary, but realism and clarity are probably obstacles one and two on the path there. So let’s not lose hope – let’s gain determination. Let’s do the maths …
An average first home costs £236,000. The average first-time buyer is 34, and the average salary for a UK 34-year-old is £37,544.
On that salary a lender will typically offer a maximum mortgage of £187,720 (rule of five), thus the gap between mortgage and purchase cost is £48,280.
Add another £2,000 – £4,000 for fees and our benchmark is complete: the most average of average UK first-timer buyers will need roughly £50,000 cash-in-hand.
See the target
As said, clarity is a key ingredient. Yes the numbers might be steep but a challenge is easier when you can see it.
If you’re ready to plot a sane and sober path to home ownership, the financial planners at Money Means have a trio of tips. Ready?
1. Remember your why – it usually pays to keep your why front and centre so lock yours (home ownership and what it means to you) into your consciousness. It’ll make your plan easier to stick to and the sacrifices easier to stomach.
2. Use all available help – Lifetime ISAs are a great way to give your deposit a boost. LISAs, as they’re called, benefit from a 25% government bonus worth up to £1,000 per year. And don’t be shy – these products are there to be used.
3. Understand where you stand – speak to a mortgage adviser early in the process to get to grips with what you can afford to spend on a home. A mortgage consultation, which is usually free, will help you in the financial specifics of first-time buying.
Purchasing a first home can be tough but good planning goes a long way.