Getting The First Time Buyer On The Property Ladder
The recent downturn in the economy has emphasised the importance of the First Time Buyer in the market place, as their buying power, or lack of it, has a rippling effect not only on the property market, but also on the economy as a whole. The First Time Buyer’s absence from property transaction chains is preventing sellers from moving on, and the market is consequently stagnating.
The road to recovery for the property market will undoubtedly require significant efforts throughout the property industry, and also government policy, to revive these fundamental First Time Buyers’ ability to get on to the property ladder. Although at present the lending institutes and government policy lend little to alleviate the situation, the proposals relating to the Stamp Duty threshold being taken up to £250,000 and the Bank of England’s policy on interest rates will be watched closely by us all over the next few months in light of the need to win votes in the current economic climate.
Whilst we wait, the current re-adjustment of property prices means that buying a property should now be more affordable as prices are re-adjusting to a more realistic level. The sub-prime lending crash has lead to the tightening of banks and building society’s lending criteria and the 100% mortgages, self-certification mortgages and low interest rate products that have been in abundant supply over the last few years have all but disappeared.
The increase in the costs of living also means that it will be harder to save the deposit that is now needed to purchase in the majority of cases, and instantaneous property ownership for anyone with an income is now a thing of the past.
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First Time Buyers must be encouraged to take the plunge and take advantage of the current buyers’ market in the road to recovery. Advice must be readily available from mortgage/financial advisors, estate agents and solicitors alike, working together to make the first time buying experience more attractive. Buyers must be made aware that more preparation will be needed by them and the decision to buy will have to be calculated.
The absence of a variety of mortgage products is of course a problem, however, by visiting a mortgage advisor within the banks and building societies, or by seeing an independent financial advisor, a First Time Buyer can access the amount that will comfortably be lent by a lending institution and how much deposit will be required before they consider buying. This is in essence agreeing a mortgage in principle before you have set your heart on a property, as used to be a common place initial procedure before the property boom.
Borrowing from parents or family will be one option to raise the shortfall needed to purchase. Parents or family can also be considered by lending institutions as guarantors. Buying with a partner or friend shares the burden of mortgage repayments. As long as the correct legal advice is sought, these are valid options to get on the property ladder. Further, the government is already committed to produce affordable housing, and shared equity and shared ownership schemes should be considered by those on a low income.
Property has become an instant money making short term investment over the last 5 years, but perceptions do need to change. First Time Buyers should be reminded of the longer term traditional rewards of private homeownership. Those in rented should consider the long term ideal that instead of lining the pockets of a landlord, they could be paying in to a mortgage of their own for their future. Those living with parents have the ultimate consideration of having their freedom! Having a property for it’s value is not perhaps a healthy social outlook for any of us, and more emphasis should be placed primarily on property being purchased to make a home, and be considered secondarily as an investment for the long term future.
Foot Anstey’s Move Forward team specialise in dealing with First Time Buyers. Help and advice is always on hand to work out costs and answer questions from the outset, and once the all important decision to buy has been made, we ensure that the transaction goes through as smoothly as possible.
For more information or advice contact the Move Forward team on 0845 002 02 01 or email enquiries@moveforward.biz
Friday, 15 August 2008
If you are buying a 'new home' our specialist New Build team can help , or if you prefer a more tailored face to face approach visit Classic Move.
