Once you finally make it onto the property ladder, you complete a life goal.
And you deject the anxiety that comes with ‘wishing for what could be’.
It’s tough, before that first step.
You feel the days tick away. Your colleagues share their housewarming photos on Facebook. And you become all too aware of how the property you’re living in is not yours.
£650 goes to your landlord – and that’s that. Gone for good.
But if you make it … you can unlock the rest of your life.
And here’s some good news:
The number of first time buyers in 2014 was the highest since 2007.
More people are ‘making it’, escaping the limbo phase and moving on with their lives.
In fact, 50% more people bought their first home last year than in 2012, according to the annual Halifax First Time Buyer Review.
Almost half of all new home purchases were completed by FTBs (most of which in their early thirties)
Let’s have a look at why that happened, what it means for you, and what you can do — today — in order to edge closer to owning your first home in 2015…
3 Reasons Why More People are Buying their First Home Today
- Mortgage deposits are lowerThe average UK deposit came in at under £30,000 for 2014 (and that’s including London prices).Deposits covered 17% of the total mortgage (down 3% on both 2013 and 2012).
For those who opted for the schemes like
Help to Buy, just 5% deposits were required. That could’ve been as low as £4000 in Northern Ireland, where the average mortgage was recorded at approximately £83,000.
- Stamp Duty has changed (for the better)
Just as you started opening your advent calendar, the government rolled out a long overdue change to Stamp Duty Land Tax.
And it saved first time buyers just under £800 on average (that’s two iPads for Christmas).
Here’s how it used to work…
Any property priced at £250,000 or below would be taxed at 1% (£2,500). But any property priced at £250,001 would be taxed at 3% (£7,350).
Here’s how it works now (thankfully)…
- You don’t pay tax on the first £125,000
- You pay 2% tax on the amount up to £250,000
- You pay 5% tax on the amount up to £925,000
- You pay 10% tax on the amount up to £1,500,000
- You pay 12% on everything above £1,500,000
For first time buyers looking at a mortgage of £140,000, you now pay just £300 in tax, on the £15,000 from £125,000 up to £140,000.
In the ‘olden days’ (pre-December 3rd 2014), you’d be looking at a £1,400 chunk in Stamp Duty. Gulp.
- Rates are at a record low
The average 2 year fixed rate is at 2.08% – plummeting from 6% in 2008.
So, on our £140,000 mortgage from earlier, we’re now paying £599 per month. We’d be paying £902 per month back in 2008.
— Note: House prices were up on 2013 by 9%, so it’s not all great news. But making that first step has definitely been made easier for most. —
Where’s the most affordable place to buy a home in the UK?
I like Chicago town pizzas. They’re about a pound more than Aldi’s own.
But I don’t care. I’d rather ‘fork out’ the extra quid … even when I’m cutting down my grocery bill, the Chicago Towns must go in the basket.
We’re all different. And so there’s no way I can tell you where the most affordable place for you to live is in the UK.
But if we just go off earnings versus mortgages, I can safely tell you that Scotland is currently one of the best options.
The House Price to Average Earnings ratio in East Ayrshire is 2.8.
Average house prices in Scotland were recorded at £125,258.
So, theoretically, East Ayrshire residents average about £45,000 in annual salaries.
Cheaper homes. Nicer wages.
Action for the week
What does all this mean?
Basically, right now is a more affordable time to get on the property ladder (in general).
Rates were expected to rise in summer of this year. But a rates increase is now expected to be delayed until 2016 (thanks to things like the oil price dip … another money saver from 2014).
But this is just a snapshot of what is a very complex marketplace. Anything can happen to change things.
So, here’s my best action for almost first time buyers …
Get yourself some free advice from a broker who knows the mortgage game inside-out.
All your questions answered. All your concerns reassured. No charge whatsoever (brokers take their fee from the lenders, not you … and there’s never an obligation to get your mortgage through them anyway).
If you’re in two minds about it, there’s no harm in checking what first time buyer mortgages they have available. Worth doing while the signs are so positive.
Good luck. And please share your house hunting stories in the comments.
Thanks for reading.