It’s a difficult situation to be in, but one we see a lot of the time. The dilema between renting and buying. According to a recent survey by Halifax, 372,000 First Time Buyers made their step onto the property ladder last year. This equates to half of all house purchases with a mortgage. This is the first time since 1995 that First Time Buyers have accounted for such a large share of the market, showing the strength of the first time buyer market.
Getting on the property ladder
Often, home movers are in two minds whether to make the leap (e.g. “I like my neighbours, but I’d like an extra bedroom”). This is the opposite to most potential First Time Buyers who, if you ask them, aim to get on the property ladder one day. There’s a real determination with them.
As a result of this drive to be homeowners, they are often undeterred by external factors such as ongoing political events. Whilst the housing market does suffer peaks and troughs, this hardly ever stops people who want to get onto the property ladder.
Buying a property should always be classed as a long-term investment. And whilst it might not be ideal if your home drops in value, history suggests that when that does occur the prices go back up in the long run.
So buying is always better than renting then?
Well, no, not necessarily. Mortgages aren’t always the right answer. It might come as a surprise, but we regularly encourage young people to rent when they first move out of home, especially if they are a couple. This is so that they can determine what type of property they want and if they can live together. The downside is that whilst you’re paying rent, it’s harder to save for a deposit, somewhat of a catch-22 situation.
It’s also worth noting that getting out of a mortgage can be difficult and sometimes expensive. Therefore, you have to be sure that things are going to work out OK before you commit to one.
Small deposit mortgages
95% mortgages are more readily available now than they used to be. If you’re more than halfway to having the 5% deposit saved up, then it’s worth trying to get an Agreement in Principle in place. This will help you check that you will be eligible for a mortgage when the time comes.