At Manse & Garret, we are always looking out for information that can affect our Clients. Halifax recently claimed that it now costs (on average) £100 less per month to buy a property, than it does to rent the same one, which may have an impact on our buy-to-let Client’s. In the last year, there has also been a rise in the number of first-time buyers successfully securing a mortgage.
First-time buyers have been able to climb onto the property ladder due to the re-availability of 95% mortgages and a number of schemes, such as FirstBuy, Lend a Hand and the Save to Buy Scheme launched by Nationwide.
At first glance, these schemes seem to be just what is needed for ‘first-timers’ to climb onto the bottom rung of the property ladder. However, regardless of whether someone has spent years saving up for a 25% deposit, has a generous Aunt willing to put money aside, or manages to get backing from their Local Authority, this still does not guarantee that the mortgage application will be successful.
For a start, a bank or building society will only lend four times the amount of an applicant’s wage. For those earning the minimum wage (roughly £12,600 per year) the amount a mortgage provider would lend is £50,400. The average annual salary in the UK is around £26,200, which would generate a loan of £104,800. This means that those earning the average salary would (at most) be able to purchase a 2 bedroom property in London – but only in areas such as Thamesmead, Abbey Wood or East Ham. Those on the minimum wage would be able to afford a garage in Prime Central London, a one bedroom houseboat, or a share in a new build property, (which also works out more expensive per month than buying outright).
Realistically, unless you are fortunate enough to be able to purchase property outright, or to earn at least the average UK wage, the chance of owning your first property seems to be slim-to-non-existent. Whilst there has been a rise in the number of first-time buyers purchasing their first property, I suspect that the proportion of first-time buyers unable to buy is much higher than the proportion who are. The mortgage schemes available, for some, are most definitely a mirage, as they lack the substance necessary to be tangible.
Fortunately for top-end Buyer’s Agents like us, our first-time buyers are either able to meet the requirements for a residential mortgage, or have the funds necessary to purchase a property outright. We are well placed to help them secure their first home in the right area and at the right price, as we know how property transactions work in the UK. If you are looking for your first (or second!) property in London or Brighton, give us a call today to see how we can help you with your search, as we are officially the best Property Finders in London.