First-time buyers across the UK are facing unprecedented difficulties getting on the increasingly elusive property ladder. From a purely financial perspective, buying a home for the first time is an exponentially bigger challenge than relocating.
Those who already own their own homes are exempt from the single biggest issue blighting those who do not. As it stands, average UK house prices are teetering on the brink of £300,000 – a record high. With most major lenders expecting a deposit of 15% for a competitive mortgage offer, a typical first-time buyer would need to come up with around £45,000.
Coupled with the additional costs incurred when buying a home, the total figure would be taken well beyond £50,000. By no stretch of the imagination is it possible for the average UK earner to pull together this kind of money to qualify for a mortgage.
As a result, more would-be homebuyers than ever before are accepting that they have little choice but to pursue long-term rents; a particularly bitter pill to swallow, given how average monthly rents are now higher than average mortgage payments on equivalent properties.
Help For First-Time Buyers
To date, all government initiatives to supposedly support struggling first-time buyers have been met with a lukewarm response at best. One example of which is the Lifetime ISA (LISA) scheme – a programme that allows prospective homebuyers to save up to £4,000 a year, which the government will top up with a 25% bonus (i.e. a maximum of £1,000).
A scheme that appears generous enough on the surface, but does not offer nearly enough to bring savers close to the £50,000 needed to qualify for a mortgage.
An expansion of the Right to Buy Scheme was also recently announced, which will give up to 2.5 million housing association tenants the right to purchase their properties at a discounted rate. Though again, with very little by way of support where initial deposit requirements are concerned.
Second-Time Buyers and Movers
To a degree, skyrocketing property prices are playing squarely into the pockets of existing homeowners. Average house prices have increased more than 10% over the past year alone, and in some regions have spiked by more than 70% since 2012.
But what is often overlooked (or at least underestimated) is how complicated and costly it can be to relocate. Moving house is only possible after finding a viable buyer for your current home, and beating all competing bidders to the punch to secure your next home.
Consequently, around 60% of second-time buyers say that they found the process more difficult and stressful than getting on the property ladder in the first place.
Significant Relocation Costs
Relocating can be a surprisingly expensive endeavour. According to the latest figures from Lloyds Bank, total relocation costs for the average mover in 2021 exceeded £12,000 for the first time. While this does not come close to the £50,000 needed to qualify for a mortgage as a first-time buyer, it is still a significant sum of money to pull together for the average homeowner.
In addition, the process of selling a home can be complex and time-consuming. From solicitors to surveyors to estate agents, the number of parties involved in even a straightforward relocation can be quite remarkable.
It is also worth remembering how the costs associated with relocating comprise little more than fees, taxes and general support/representation costs. At least when buying a home for the first time, the initial deposit payment is subtracted from the purchase price of the property and so technically remains your own money.
So while you need a much larger sum of money to take out a mortgage as a first-time buyer, you actually stand to spend more by way of costs when relocating.
Keeping Costs to a Minimum
In both instances, the key to minimising costs lies in seeking the best possible support and representation at an early stage. An experienced independent broker can help first-time buyers and movers alike build a clear picture of the most affordable funding options available.
Brokers work on behalf of their clients to negotiate the kinds of deals that are rarely available on the High Street. From preferential interest rates to reduced overall borrowing costs, the help and support of a qualified broker can prove invaluable.
For movers in particular, considering the alternatives to conventional High Street loans and mortgages can pave the way for significant savings. Bridging finance has become a popular choice for those looking to opt out of fragile property chains entirely and purchase their next homes in complete confidence.
Whether you are looking to take your first step up the property ladder or simply out to save money when relocating, our skilled brokers are standing by to help. Contact UK Property Finance anytime for an obligation-free consultation.
Meta: Buying your first home and relocating can both be alarmingly expensive, but which of the two is more difficult and what help is available?
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