The media love to talk about it, we all have something to say about it, our wages don’t seem to cover it, and the amount to save just keeps rising. Yes, we can only be talking about the dreaded deposit required to buy your first home.
Saving enough money is one of the biggest challenges these days for many aspiring homeowners. With new housing currently in short supply and house prices accelerating, competition to get your dream property is less ‘Location, Location, Location’, and more like a match between Rocky Balboa and Muhammad Ali.
Further to this, rising rental costs is gradually beginning to have an adverse effect on renters and is likely to have impact on their ability to save. Recent research found that at least half of prospective homeowners believe home ownership is an unrealistic possibility for some time to come.
So how are we all feeling about this? According to research conducted by the current Post Office Money Mortgages survey, an overwhelming 45% of those asked had severe doubts as to whether they would actually make it onto the property market. A total of 28% feared that unless there was a dramatic change in their circumstances, they would never be able to save for a deposit. A further 17% who had the potential to take out a home loan stated affording the repayments was a key cause for discomfort.
To add to this, the average age that they think they will be able to achieve their goal of homeownership had jumped to 36, up from 35 in 2014. It’s all beginning to sound a bit doom and gloom doesn’t it?
With rents becoming ever more expensive and the notable rise in house prices, it is clear to see just how difficult and challenging raising a deposit has become these days. However, that is to say it is by no means an impossible task. There are several courses of action you could take to save and boost your chances of securing your dream home.
Managing your budget and keeping a close eye on your expenditure is one strategy worth putting into practice. Being shrewd and making cut backs will give you that all important opportunity to save. It may seem hard at the time to cut back on your favourite Friday takeaway’s, or forgo on this year’s holiday, but we promise, it will be worth it in the end.
Possibly not an ideal scenario to some, but moving back with your parents is always an option. It’s not an ideal situation for many, but such a move could be to your advantage. The prospect of living virtually rent free could make all the difference and help you enormously to put funds away since you will have considerably reduced outgoings. The Post Office survey discovered that half of those who choose to move back home with their parents now envisage gathering the appropriate finances within a two year period.
You may also want to consider the Government’s Help to Buy scheme – 25% of respondents planned to utilise this option and with the knowledge you will only require a deposit of just 5%, it could be an invaluable route to securing your first mortgage.
Whether you were to choose a Help to Buy scheme or not, it is crucial to seek mortgage advice and to have an understanding of what type of mortgages are in the marketplace. Having a grasp of what your possible monthly repayments may look like will allow you to budget appropriately, especially since you need to clearly demonstrate affordability to lenders, not only now, but in the event of a rate rise.
Taking such practical measures can make all the difference but it can help make that path to home ownership an easier one. Having a plan in place, knowing your budget and saving hard will stand you in good stead towards achieving your goal of home ownership.
Author: Ross Baxter
Image Credits: Flickr
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