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First Time Buyers and Affordable Homes

By Andy Jones

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Published: 14Nov2009
Word count: 483
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Times have changed for first time buyers. House prices were escalating by the week, and more and more first time buyers were stretching themselves, with, reportedly, some up to borrowing six times' their salary on mortgages that were being offered in a desperate attempt to get onto the property ladder. Affordable housing was also growing in popularity and demand due to escalating property prices, a shortage of affordable housing in key areas, especially for key workers, and a social housing shortage.

Over the last 18 months now that the credit crunch has hit our economy, it is a very different story. 100% mortgages are no longer offered, and large deposits, on average £15,000-£20,000, are being secured by mortgage lenders before they will even consider first time buyers as a customer. Mortgage lenders are still extremely cautious in the current climate, and the cost of borrowing for the first time buyer is also higher compared to previously, as more and more mortgages have been withdrawn from the market. Those buyers with large deposits are in a much stronger position. If you're still trying to get onto the property market in these tough conditions, then you will need to be patient and save as much as you can so that you have a good amount of deposit to put down on your new home. You may need to make as many economies and savings in your lifestyle as you can, and really think about your spending patterns and habits. Unfortunately because of interest rates for savers being so low, you will need to look around for a savings account that will give you a higher return of interest on savings while you save.

You can also consider housing associations that have a stock of affordable homes available and consider first time buyers for their schemes based upon certain criteria. Mortgage lenders are still lending to buyers in affordable housing schemes, and it's a good idea to do some research in your area and find out if there are any housing associations with schemes near you, offering you the type of apartment or house that you are looking for. Go along and find out what your financial options are, and the lending criteria for any schemes.

There are other options when buying affordable homes that can be considered. Buying in a location further out of town is a good option as first time buyers can get more for their money and pay less for homes. Property can also be bought and rented out to achieve a rental income as long as it provides a high enough rental yield and covers all of your costs. You could also buy with a friend or family member, where you share the cost of the mortgage and pay bills jointly. This is a good way to get onto the property ladder affordably, and can be a sensible alternative to renting.

Written by What House's Andy Jones. If you are interested in affordable homes, visit What House?: http://www.whathouse.co.uk/AffordableHomes.aspx

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