Jun 27

How can you possibly get on the housing ladder?

Reading Time: 6 mins

If you follow the news cycle, it’s quite apparent just how tough it can presently be for those hoping to enter the housing market. Getting your foot on the ladder seems to be the hardest part of all, particularly for those renting. Over 65% of the United Kingdom is currently renting a property, which is a massive proportion. Even more than that, latest figures show that a third of those people have on average £23 left a week after spending on the vital costs of running a home. This sounds crazy, but it’s true.

With all of this seeming hardship, getting on the property ladder might seem less possible than ever. However, all hope is not lost, and luckily you’re in the right place to learn some alternative solutions to this. While none of these tips can replace good fortune and stringent financial planning, nor can we suggest you simply ‘wait until you have a better income,’ it might be that the following methods help you get your foot on the bottom rung of the ladder:


Shared Ownership

Shared ownership is perhaps one of the most promising methods of getting on the housing ladder, but only if you’re careful. Shared ownership arrangements are often run by your local housing authority or association. In order to take advantage of this, you will have to buy a percentage of your home. This might be from a quarter to half of its value, and sometimes, even more, depending on the property. From there, you can continue with rental payments until the outstanding balance is completely paid off. This can function as an excellent method of getting one step in the door.

Remember though that this saves you little money, and in some circumstances can show you more. Also, not all mortgage lenders will find this deal attractive, as it means taking a risk on a much-reduced payment to begin with, and the mortgage upkeep will not be the only regular cost you will have to pay in order to stay in the property. However, if you find this viable, and the property you have your sights set on is available, this can be a great method of slowly stepping onto the housing ladder. Just remember that no matter how regular your payments, a share of your house will always remain with the housing association until you are cleared off all your dues. This means while it is a method of getting on the housing ladder, it can be one of the slowest. Thankfully, you can at least stay in the property during the entire process.


New Custom Homes

Sometimes gaining access to your first property is as simple as going through the right avenues. For example, new homes for first-time buyers are constructed all the times, and keep in consideration the size requirements of a new family, allowing for a humble yet pleasant space to reside in. Often these desirable homes are produced in an area en mass, meaning that the production costs of carefully building these estates can be reduced, and that can translate to the initial price. Also, mortgage firms sometimes work in tandem with these developments in order to help new buyers get onto the property market in a secure environment, because they know that the new housing arrangement will likely be lived in for some time, and is less likely to need extensive repairs.

Not only is this a desirable place to begin your new life from a financial perspective, but these homes often draw new homeowners in just like you, allowing for a peaceful, pleasant and supportive local community. After all, if you’re laying down the financial burden of mortgage repayments, it’s always worth enjoying where you live to an elevated degree.


Guarantor Mortgages

Of course, asking family or friends to contribute to your new family home might not be a possibility unless you live in an extremely affluent social setup, and in that case, it’s likely you won’t be reading this article at all. However, there are methods in which you can utilize the most trusted near you to get on the property ladder. Sometimes, it’s possible to attain a mortgage without a deposit, which can really help for new buyers. For example, if you are able to convince a relation to serve as a guarantor, and you have good credit, you could potentially secure a mortgage without any downpayment needed. Just remember that this isn’t a costless form of gaining a new home, as the financial prospects of your loved one will serve as collateral. This might not be the most peace-inducing arrangement for a parent or elderly relative, so keep that in mind. Also, consider the cost of defaulting on these payments. Not only could they ruin the financial prospects of your family unit, but the guarantors, and the tight relationship you might share.

It’s best to keep all other pillars of your income as strong as possible during this process. For example, it’s essential to know that your job is unlikely to lay you off, or that your business is likely to experience a dip in cash inflow. If you have any doubts as to the security of your situation, it can be wise to leave this arrangement until you can. If you do consider this a possibility, however, this arrangement can be one of the most cost-effective methods on this list.


Rent To Buy

The new government-subsidised method of owning a property is worth looking into, despite criticism as of late. This method simply suggests that a seller allows the potential buyer to rent a property until they generate enough equity to become validated for a bank loan, and to own the house in future. This allows you to move in sooner, helps lessen the final purchase price, or at least makes it more manageable to reach, as well as eschewing the initial massive deposit. However, remember that you might be paying a higher amount of rent to make the arrangement attractive to the landlord, or that if you fall behind in payments once or twice you might lose your ability to complete this process and purchase the house at the end of the lease. Both of these are relatively difficult scenarios to contend with, so you should either make arrangements to deal with them immediately, or only sign onto contracts that you can absolutely fulfill with some wriggle room to spare.


Humble Properties

It might not sound like an option, but sometimes living in more humble properties can be the way forward. Living in a city is very costly for a young professional hoping to get on the housing market, and that can often turn off any creative effort towards the process. Luckily, this needn’t be the case. Heading out of town and going through any of these arrangements in a smaller property, or simply finding a property that needs work doing to it, can help offset the usual costs of renting or those found in a buy to let scheme.

From there, it might be more than possible to turn over the house in decoration, plumbing and electrical setup, and sell the house or let it out for immediate or sustainable income at a profit. If you rinse and repeat this as a side activity during your working life, you might find yourself at a point where purchasing a great property with a competitive mortgage could be nothing more than a fantastic reality, and your hard work might have paid off better than initially expected.

This might not be an option for young families, for those who work many hours a week, or those who simply find turning over properties to be a little more stress or work than they’d like to input. That’s perfectly fine. However, if you’re absolutely looking to cut costs and maybe even profit from getting onto the property ladder, this can be a wonderful place to start.


Extended Mortgages

More and more people, especially millennials, are extending their mortgage terms to acquire better and more favorable long-term affordability. This might mean extending the repayment dates by a matter of years in order to lessen the yearly contributions, or it might mean paying more for a shorter amount of time in order to be rid of the obligation faster.

This might mean that you’re tied to a property for much longer than you had expected, but this can be an extremely reasonable and potentially beneficial method of doing things, especially in a highly competitive and tight housing market. Also remember that extending your mortgage payments for years might be offset by the potential career path you choose, as long-term promotions and higher developmental incomes could lead to managing this cost, or wiping out your mortgage entirely faster than you had initially expected.


In Summary

There are many methods of getting onto the housing market. However, with some of the tips explored here, you might find yourself with a more direct and promising route there than you might have originally considered.


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