Buying your first home is tough full stop, but buying your first home in London is even tougher.
According to Yorkshire Building Society research, around half of first time buyers in the UK’s capital say sky-high prices are preventing them from getting on the property ladder – and 4 in 10 are willing to move to a more affordable part of the UK in order to purchase their first home.
Is buying a property outside London the best move?
You can certainly get more for your money by looking at property on London’s outskirts; the average price for a house in Kent, for example, is just over £317,000 according to Rightmove. Contrast this with the capital, where a property will set you back over £552,000!
As more families cash-in and move out of the capital, the estate agent Savills has calculated the savings in house prices per minute per train journey. They found House prices in the London commuter belt fall by more than £3,000 for every minute further away the property is by train from the capital,
However, choosing to buy outside of London is more than an escape to the country. Your commute might be convenient initially, but what happens further down the line if you decide to change job? Or you want to start a family but the property is too small?
Too many women find themselves in a situation where their life circumstances change, but their mortgage isn’t flexible enough to adapt to their new circumstances. This leaves them stuck in a less than ideal situation until their mortgage terms come to an end.
Mortgage flexibility for first time buyers
It’s easy to get caught up in the romance of buying your first home, but it’s important to think about how you’re buying it, as well as what you’re buying.
Firstly, when calculating the size of the mortgage you are going to require, make sure you’ve taken into account all of the costs associated with purchasing a home. A recent study by Pegasus Personal Finance found that 40% of people don’t plan for unexpected fees such as searches, mortgage set-up costs, solicitor fees and bank transfer charges.
After crunching these numbers, you may decide that you want to save up further before getting onto the property ladder. The good news is that there are new mechanisms in place to help your money grow quicker.
In December 2015, the Help to Buy ISA was launched, a tax free saving account in which the government provides a bonus of up to £3,000, depending on how much you put in.
For those looking to buy further down the line, The Chancellor recently announced a new Lifetime ISA for the under forties, which will be launched in April 2017.
Once you have enough for your dream home, make sure you look carefully at the best mortgage deal for your needs. Factor in the fees associated with taking out a mortgage, as some providers will charge arrangement fees, so look beyond the headline interest rate.
Also be aware that most mortgages incur exit charges if you decide to switch providers later, this can add to the cost of moving home if you decide to purchase another property further down the line and want to use a different mortgage lender.
I want to save up for my first home – where do I start?
If you’re unsure about how to save for a deposit for your first home, or would like an illustration of what your mortgage would cost, contact our team today.
Click here to read our recent blog “The perfect Financial Plan?” for support with getting your finances in order.
INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.
REMEMBER YOUR HOME MAY BE AT RISK IF YOU DO NOT KEEP UP WITH THE REPAYMENTS FOR A LOAN OR MORTGAGE SECURED ON YOUR PROPERTY.