A Guide to Getting Onto the Property Ladder
If you are on a low income or minimum wage, then the idea of getting onto the property ladder may seem daunting. However, by taking the right steps with patience and discipline, this is something that can become very achievable. To help you get started, we have provided a few tips below.
Reduce Expenditure and Start Saving
The most obvious yet most effective way to save the money for a deposit is to continuously save over months, perhaps even years. This requires discipline to keep aside a bit of money each month to put into your savings. You can start by taking a look at your monthly expenditures and ask yourself, what can I cut back on?
If you find that you are frequently going out clubbing, partying, clothes shopping, then perhaps these could be areas where you can cut back on and save. According to research from Statistica, in 2017, one in eight UK adults had no cash savings. Those aged between 18 and 24 years had the lowest mean amount of savings in any age group.
It’s not too late to start saving now! Over time, you will see a steady increase in your savings and you will realise that saving money doesn’t need to be so difficult. You can use a savings calculator to figure out how long you will need to save for a deposit. Before you know it, you’ll be able to save for a deposit for a property which brings you one step close to getting onto the property ladder.
Have Realistic Expectations For Properties
When it comes to searching for the right property, it can be a very challenging task with all of the different factors that you need to consider, such as the location, the price, the amenities, parking space, etc.
If you are on a lower income, then it would be ideal to set yourself a budget before browsing the market for potential properties. Having a set budget in place will help you be more realistic when searching for a property. Although it might be nice to have an extra bedroom and bathroom, would you be able to comfortably afford it? If it’s a bigger house that you’re looking for, then you should be prepared to save a bit longer.
Variable-rate mortgages can sometimes result in higher mortgage payments due to the fluctuations in interest rates, so it’s important to keep this in mind when looking at properties.
Consider Buying A Property With Someone
If you are looking to get onto the property ladder sooner or if you already have plans to live together with someone, then you may be thinking of buying a property with another person. This could reduce the amount that you both have to put in to purchase a property which can make saving significantly easier.
You may wish to invest with a family member, a friend, or your partner. However, this is a big commitment and you should only go through with the purchase once you are both honest and clear about what you both expect from living in the same house.
Take A Look At Help To Buy Schemes
To encourage more people to step onto the ladder, the Government has introduced a few opportunities to help first-time buyers. For people on lower incomes, this can help out significantly.
- One of the opportunities that the Government has offered is a Help to Buy ISA, which is offered by many banks. This is a type of savings account that enables the Government to provide a contribution towards the purchase of your first home, depending on the amount that you have deposited into the account. Upon opening the account, you can deposit as much as £1,200. After the first month, you can then save up to £200 each month.
- Another opportunity that the Government recently introduced is the ‘Rent To Buy Scheme’. This enables you to rent a property for 20% less than actual market value and during this time, you will be able to save up for a deposit for the house that you are living in. Either at the end or during your tenancy, you can buy the property or you can part-buy.
- In respect to Stamp Duty Land Tax, first-time buyers are now exempt from this tax on properties up to £300,000 or they will pay a reduced amount on properties up to £500,000.
There is a lot of incentive to use a Help to Buy Scheme so you may wish to consider this if you’re looking to get onto the property ladder.
Consult A Mortgage Broker
If you have concerns or questions about buying a property and what types of mortgages would be best for your needs, then you can talk to a mortgage broker. They can walk you through every step and provide bespoke advice on how much you will need to pay in upfront costs and on a monthly basis. In addition, they can help identify a maximum budget for purchasing by examining your income.
If you’re a first-time buyer, then it would be even more beneficial to consult with a mortgage broker. There are several things that you need to ensure as a first-time buyer to maximise your chance of obtaining a mortgage.
You need to ensure that you are registered on the electoral roll and check that your address matches up with the ones on your payslips and bills. If you are a freelancer or on a zero-hour contract, then it’s important that you can show further documents, such as your payslips and tax returns. The more paperwork and documentation you can show, the higher the chance that you will be able to obtain a mortgage.
Contact Hadleigh Estate Agents for Properties To Buy & Rent
If you’re looking for a property to buy or rent in Birmingham, then please get in touch with our property experts. With over 40 years of experience, we are a market leader in the Harborne and Edgbaston area. Our friendly, experienced, and qualified team of estate and letting agents like to take the time to understand your needs to find out exactly what you’re looking for in a purchase or sale.
Get in touch with us on 0121 427 1213 or you can send us an email here.