### Five Strategies for First-Time Home Buyers to Enter the Housing Market
Navigating the housing market as a first-time buyer can be an overwhelming experience, especially with rising prices and stringent mortgage requirements. However, recent predictions from financial experts suggest that mortgage rates are expected to decline in the coming year, potentially making homeownership a reality for many. With careful planning and knowledge, entering the real estate market can be manageable. Below are five practical strategies for first-time buyers looking to secure their own home.
### 1. Start Saving Early
According to data from UK Finance, the average deposit required for first-time buyers stands at approximately £34,500. Hence, initiating savings at the earliest opportunity is imperative. Open a Lifetime ISA (Individual Savings Account), which offers a significant benefit: for every £4,000 saved within a tax year, the government adds a bonus of £1,000. The chief executive of Tembo, Richard Dana, emphasizes that young savers could accumulate up to £22,000 in government bonuses by maximizing this allowance from ages 18 to 30. Importantly, contributions from family members can also apply, but it’s vital to remember that the funds can only be withdrawn for purchases capped at a home value of £450,000.
### 2. Investigate Low-Deposit Mortgage Options
For buyers who struggle to scrape together a substantial deposit, a variety of 95% loan-to-value (LTV) mortgage schemes are now available. As noted by David Hollingworth from London & Country, there hasn’t been a broader selection of low-deposit mortgages since before the financial crisis of 2008. Notably, the Yorkshire Building Society provides a mortgage option requiring only a £5,000 deposit, allowing for financing of up to 99% of the home’s total value. Other lenders, such as Skipton Building Society, offer mortgages that may cover 100% of the purchase for those with a solid rental payment history. However, potential buyers should be cautious, as these options usually come with higher interest rates and may impose stricter requirements for self-employed applicants.
### 3. Consider Shared Ownership Options
Since the 1980s, shared ownership schemes have existed in England, allowing first-time buyers to purchase a percentage of a property—typically between 25% and 75%. This model is also available in Scotland, Wales, and Northern Ireland. Buyers are required to provide a small deposit and can then secure a mortgage for the purchased share, paying rent on the remaining portion. Over time, participants have the option to “staircase,” which means gradually increasing their ownership stake while decreasing their rent obligations. Laura Gaskell from Snugg Homes notes that shared ownership is not exclusively for younger individuals; the average buyer age within her organization is currently 48, highlighting its accessibility to a broader demographic.
### 4. Explore ‘Income Boost’ Mortgages
The “Bank of Mum and Dad” may not be feasible for many aspiring homeowners, but there are alternative methods to obtain financial assistance from family without having to borrow. The so-called “income boost” mortgages, or Joint Borrower Sole Proprietor mortgages, allow buyers to add family members (or friends) to their mortgage in order to increase their borrowing capacity. Importantly, while these additional contributors are legally responsible for the mortgage, they do not have ownership rights, thus preserving the buyer’s first-time buyer status. Richard Dana points out that many younger buyers use this option to access additional funds while retaining resources for future needs.
### 5. Take Advantage of Professional Mortgages
Various lenders offer specialized “professional” mortgages designed for those in accredited professions such as doctors, architects, and accountants. These professionals may qualify to borrow up to six times their annual income. Lenders like Teachers Building Society and Kensington offer tailored products that cater to the specific needs of professionals in secure careers, often considering overtime and secondary job incomes. David Hollingworth encourages buyers to shop around, as rates can vary, and finding the best overall fit is essential for affordability.
### Conclusion
Entering the housing market for the first time is undeniably challenging. However, by implementing these strategies—early savings, low-deposit mortgages, shared ownership options, income boost mortgages, and professional mortgage opportunities—potential buyers can create a feasible path toward homeownership. As the market evolves and options expand, first-time buyers might find themselves able to secure their desired home sooner than expected.