How to grab your first rung on the housing ladder


You often hear it said of the housing crisis, and how it is becoming increasingly challenging for us Brits to get on the housing ladder. But I was quite shocked to read that roughly 75 per cent of British people have given up on owning their own place!

It will be interesting to see what impact Brexit will have on this in terms of house prices, but it’s safe to say that the housing crisis currently gripping the UK isn’t about to go away anytime soon, and for the so-called ‘Generation Rent’, the prospect of buying a first-home is an incredibly challenging one.

However, the good news is that there are some things you can do which can significantly boost your chances of being in a position to make the big step up.

Help to Buy ISA

As of April 2016, first-time buyers have been able to take advantage of a boost by way of the Help to Buy ISA. This new account, which is available to anyone over the age of 16, offers a 25 per cent Government-sponsored bonus on all savings in excess of £1,600. In terms of maximums, you can deposit up to £1,200 in the first month and receive the full bonus on this, and then deposit up to £200 a month thereafter. The most you’ll get the bonus on is a final figure of £12,000, which equates to free money to the tune of £3,000 – not to mention that you earn interest all the while too. The bonus is paid upon purchase of the property, and is only usable towards your mortgage deposit. But that’s about it in terms of caveats: it really is a no brainer for those who are looking at making the leap within the next few years.

Give your credit rating some TLC

Getting a mortgage, and doing so at a decent rate, will depend greatly on your credit score. Fortunately, optimising this is pretty easy, and there are some quick wins. For example, simply registering on the electoral roll will help, even if you don’t actually vote. It’s also a good idea to have multiple lines of credit and obligations open (even things like mobile phone contracts), using them, and then paying them off. This sort of thing demonstrates to lenders that you are able to handle your debts. The other thing you should do is get access to your credit file. Sites such as ClearScore allow you to do this for free, and by doing so, you will be able to get a steer for where you can improve, while you can also check to see if there are any errors in your file.

Consider the Lifetime ISA

There is another alternative to the Help to Buy ISA which will be going live in April, and it’s known as the Lifetime ISA. The two are similar in the sense that both offer a 25 per cent bonus, although with the Lifetime ISA you can earn the full bonus on up to £4,000 a year (ie: a bonus of up to £1,000). It is available to anyone from the age of 18-40, while the bonus applies to savings contributions until you turn 50. So that’s anywhere up to £32,000 worth of free money potentially available. The rule states that there is a penalty for withdrawing from this ISA before the age of 60, unless you are doing so to purchase a first home, in which case there isn’t a fee. So if you think you’ll be able to put more than £200 a month away to save towards your home, this may be the better option.

Being savvy when the time comes

Once you’ve built up a considerable sum in saving towards a deposit, it’s important to make good choices when the time to sign on the dotted line approaches. Remember, it isn’t just the deposit you need to cover – there are stamp duty, solicitor and agency fees to contend with, while you’ll also be liable to fix anything that breaks (unlike when you’re a tenant and the onus is on the landlord). So it’s important to have a buffer in this respect.

You’ll also want to have a think about the best type of mortgage to get. Variable rate? Fixed rate? It’s also good to quietly do some research on the various providers to see who offers the best deals in terms of APRs, fees, early repayment charges etc.

But once you get to that point, the excitement really does set in. You’ve done all the hard work in terms of saving, and you’re almost there. A few more sensible decisions, and you’ll be over the line; grabbing a hold of the keys, and embarking upon your new adventure as a homeowner. No doubt, it will be worth all the blood, sweat and tears in the end.

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