First Time Buyers still struggling
First time buyers still struggling
Rising rents are making it even harder for first time buyers to get on the property ladder these days.
Those who manage to buy their first home this year can have spent nearly £53,000 in rent, according to the Association of Residential Letting Agents. The costs vary in different parts of the country, of course, and Londoners buying this year can have paid £68,000 in rent.
It's the shortage of housing that is pushing up rents so the problem will only get worse.
Anyone who is starting to rent now, with the intention of saving for their own home, might pay out over £64,000 in rent before they have been able to get a deposit together.
Clearly finding the deposit is still the biggest hurdle for first time buyers though fortunately there is more help available for them these days.
With the Help to Buy Isa, savers earn an extra 25% paid for by the government - that's an extra £50 for every £200 they save, to a maximum bonus of £3,000.
There are other Help to Buy schemes for people who have saved just a 5% deposit - the Help to Buy mortgage guarantee, the Help to Buy equity loan, and, the most recent addition, the London Help to Buy scheme.
The equity loan is only for people buying new-build property. The government lends 20% of the cost of the house so buyers need a mortgage for the remaining 75%, after paying their deposit. The London Help to Buy scheme extends the help for Londoners to 40% of the house price.
The mortgage guarantee is for people buying both new-build homes and existing properties. With the government guarantee, lenders have more confidence to give them mortgages requiring only a small deposit.
It is clear lenders are responding and today there are plenty of 95% loan to value deals around to help people with only a 5% deposit. Mortgage rates have also come down recently, making this area of the market more competitive for borrowers.
Guild Mortgage Service, Provided by London & Country Mortgages