Young people often find getting their first home under their belt is the hardest thing to do, with salaries nowhere near as high as the cost of housing. The average asking price for a home in the UK has surpassed £250,000 now, with wages staying low in comparison. It can seem like an uphill struggle to save up the huge amount of money required to buy, with the deposit often required to be around £50-60,000. Luckily, there are ways to get your first home bought without always needing to sacrifice your entire monthly wage packet!
The help to buy scheme has been around in the UK for many years, and over time it has evolved to better match the needs of younger people. The modern day help to buy allows people to borrow the money to buy a house by taking out an equity loan backed by the Government. This is usually around 20% of the value of the house, with the buyer then putting up around 5% deposit, and taking out a mortgage on the remaining 75%. This makes the whole process much more affordable, bringing the deposit down to around £12-15,000. Whilst this is still a large sum of money, it is more accessible for people than the traditional percentages. The old help to buy scheme used to be limited to new build homes, but the modern equivalent scheme offers assistance for first time buyers on any property up to the value of £500,000. New build developments are still the most popular way to access the scheme, as most younger people who are new to buying property like the style of new homes. They are often more affordable than older property, with lower running costs thanks to being more energy efficient.
Other ways to get the money together in order to buy a new home are borrowing the money from your family. The bank of mum and dad is alive and well, with many youngsters having to borrow from their parents in order to get the money together to put down as a deposit. The benefits of using family to get the money is that you are less likely to have strict repayment rules to worry about; family tend to be more forgiving! Lots of parents are in the lucky position to own their home, either outright or with a mortgage, and are able to free up some cash through mortgaging their home or gaining equity release. This way, they can get hold of a large sum of money without needing to touch their own savings pots.
Further assistance for new home buyers includes special ISA accounts specifically for savings towards the first home. These are known as the help to buy ISA, where the government puts in a certain amount alongside every pound the buyer saves. This can boost the pot substantially and the interest rates on these accounts can be quite favourable. By saving from a younger age, you are more likely to be able to access the amount of money required for a deposit on a new house and not rely on help from others.