First Time Buyers and Affordable Homes

Times are different now for first time buyers. With property prices rising weekly, there was an increase in first time buyers stretching themselves, some borrowing six times their salary, in a desperate attempt to get onto the property ladder.

Over the last year and a half now that the economy has taken a downturn, it is a different story. 100% mortgages are no longer offered, and large deposits, on average £15,000-£20,000, are being secured by mortgage lenders before they will even consider first time buyers as a customer. Bank lenders are still very cautious with the present climate and the total cost of borrowing for first time buyers is also relatively much higher compared to previously as a substantial number of mortgages have been taken off the market. Those buyers with large deposits are in a much stronger position. If you're still trying to get onto the property market in these tough conditions, then you will need to be patient and save as much as you can so that you have a good amount of deposit to put down on your new home. You may need to make as many economies and savings in your lifestyle as you can, and really think about your spending patterns and habits. Unfortunately because of interest rates for savers being so low, you will need to look around for a savings account that will give you a higher return of interest on savings while you save.

You can also consider housing associations that have a stock of affordable homes available and consider first time buyers for their schemes based upon certain criteria. Mortgage lenders are still lending to buyers in affordable housing schemes, and it's a good idea to do some research in your area and find out if there are any housing associations with schemes near you, offering you the type of apartment or house that you are looking for. Go along and find out what your financial options are, and the lending criteria for any schemes.

There are other options when buying affordable homes that can be considered. Buying further out of town may be a good option as first time buyers can pay less for homes and get more for their money. Property may also be purchased and rented out to 3rd parties for a rental income as long as it offers the yield to cover costs. You could also purchase with a family member or a friend, where bills are paid jointly and the mortgage shared. This is an ideal manner in which to jump on to property ladder at an affordable rate and may be a better alternative to renting.