Those first-time homebuyers who have suffered steep price hikes for the past year have had to rent for more extended periods. Many are also searching for other, less stressful ways to get on the property ladder.
Research carried out by Mortgage has shown that the majority (80%) of first-time buyers are looking for alternative ways to buy their first property. This all is because property prices have risen in recent years.
More than 60% of these buyers are implementing small deposits, primarily through assistance programs for homebuyers or schemes like mortgage guarantees. About 23% plan to look into shared ownership, and 25% no longer want to buy their own home. They are somewhat interested in sharing a house with friends or family members.
David McGrail of First Mortgage, a reputable mortgage broker, states that there are some options that one might consider when there are no chances of reduction in rising prices.
“No doubt, every first-time buyer dreams about the day they open the first door of their new home. But some buyers may think it’s beyond their reach.
Luckily, there are alternatives. About 33% are considering shared ownership, as we found in our research. You get possession of part of the property on a shared basis and pay rent for the rest.
The deposit for shared ownership can be much lower, making it a good starting point for first-time buyers. It allows buyers to purchase a better home than they might otherwise be unable to buy.
Although sometimes, it is more cost-effective to buy an entire house if the buyer has a larger deposit. First-time buyers may also be interested in other options, such as a mortgage help program.”
Many are finding it harder to deposit due to the increase in costs. They may even be exposed to negative equity if they are burdened with a high-interest rate.
According to David: “Over the past year, property prices rose 7.4 per cent on average. However, some areas of the country experienced even higher growth. Due to this, buyers find themselves in a challenging situation, resulting in higher interest rates because they borrow more money over time.
“Deposits have increased over the past few years. It means that many people end up having to shell out even more for a deposit that is the same percentage or smaller. So, it is imperative that buyers make wise decisions, do not rush, and seek professional advice.”