The largest mortgage lender in the United Kingdom has indicated that, despite the significant rise in property prices in 2014, the number of first-time buyers has risen by 22% compared to figures from 2013, with almost a third of a million buyers purchasing their first property last year. Also, despite significant increases in house prices, the average deposit required from a first-time buyer decreased from an average of £31,582 to £29,218 in the same period of time.
A combination of improving economic conditions, rising employment levels and better mortgage rates meant that first-time buyers were spending a much lower proportion of their income on their mortgage, at an average of 32%, which is significantly lower than figures of 50% prior to the economic downturn in 2007.
However, the most significant factor attributable to such improved conditions for first-time buyers is the introduction of Government initiatives such as the Help to Buy scheme that was introduced in the Chancellor’s Budget Speech in Autumn 2013. This scheme enables buyers to contribute an initial deposit of just 5% of the full purchase price, and can be used for new-build properties up to £600,000. The Government will lend up to 20% of the total cost of the property, which when combined with the initial 5% deposit will mean that a mortgage of just 75% will be required with a commercial lender. Before the scheme was introduced, this was largely unheard of for first-time buyers.
Furthermore, the government’s contribution takes the form of an equity loan, which means that the loan is not paid back throughout your ownership of the property; the percentage of the initial loan is later repaid using the proceeds of a future sale. Providing that property prices continue to rise as they have been, the scheme could be incredibly beneficial for all.
Although it is apparent that taking a step on the property ladder is becoming increasingly realistic and achievable for the vast majority of potential buyers, this simply would not be the case without the various options of assistance that are available, and any first-time buyer would well advised to consider each of the options available to them very carefully before taking that step.
At Nockolds we are experienced in dealing with all types of property transactions, including first-time buyers and those taking advantage of the Help to Buy scheme. If you would like to enquire about our services, please call 01279 755777 or email email@example.com.