Tips for compromises first-time buyers can make to get on ladder

Getting on the property ladder in London and the South East of England can be challenging, but here are some quick pointers one might consider:

1. Consider shared ownership: But beware of the full property price you are paying, which can often be exorbitant.

2. Look for properties outside of prime locations: While properties in central London and other prime locations may be out of reach, there are often more affordable options in areas slightly further out. Focus on transport links.

3. Get a guarantor: If you have a family member or friend who is willing to act as a guarantor for your mortgage, this can increase your chances of getting approved and may also allow you to borrow more money.

Ultimately, getting on the property ladder in London and the South East will require some compromise and creativity. By considering alternative options and being prepared to move quickly when the right property comes along, you can increase your chances of success.

Shared Ownership - First Time Buyers should seriously look at buying via Shared Ownership either a new build or a pre-owned/open market property - with no deposit necessary in most cases it's a great way to get on the ladder.
Lengthen the term - Starting your property ownership with a longer mortgage term than has traditionally been the case, e.g. 25 years, is no bad thing as long as you review your mortgage arrangements with your financial adviser regularly and reduce the term down from potentially a 30-40 year term.

Lifetime ISA's - You are being offered free money as a first time buyer. Make sure you set one up.

Extend your mortgage term - By taking a longer mortgage term your monthly mortgage payments will be cheaper initially which can help you to get on the property ladder.

Shared Ownership - Buying a portion of a home can mean you have to provide less of a deposit and which makes getting onto the property ladder easier.

Don't overstretch yourself - Too many people try to buy the 'perfect home' as their first property. It is likely you will move in the future anyway so buying somewhere just to get on the ladder and not be renting could be better for you.

Don't be scared of a longer-term mortgage. People may take sharp intake a breath at the thought of a 40-year mortgage term, but you can review that over time and bring it down as and when you feel comfortable.

Think carefully about retirement. Is it possible for you to retire any later than the State Retirement age of 68? Some jobs will regularly see people work until 70 or even 75 and some lenders will accommodate that, so you can have a slightly longer mortgage term, meaning the difference between an affordable mortgage or not.

The idea is to have the "shortest term that gives you a comfortable repayment"; there is no point in having a short mortgage term and then only being able to afford beans on toast for the next 5 years. Likewise, there is no point in having a 35-year mortgage term if you can comfortably have a 28-year term, you are just paying more interest than you need to. If you are unsure, take a longer-term and then make voluntary overpayments.

Extending your mortgage term - cheaper monthly payments but increased debt/interest

Putting down a larger deposit - using bank of mum and dad

Looking to move to a different area where properties are within budget.

Starting a couple of rungs down the property ladder. My average FTB was buying a three bed house but are now looking at flats. Rightmove report flats being more popular but i think his is out of necessity not choice.

Use alternative buying methods such as Keyzy

Consider buying with a friend...

Pros:

Shared financial burden: Buying a property with a friend in allows for shared costs, including initial deposit, mortgage payments, and ongoing maintenance expenses, making it more affordable.

Increased borrowing capacity: Combining incomes with a friend may improve the borrowing capacity, allowing for a larger mortgage and potentially a better property.

Potential for investment: Of course not guaranteed but jointly owning a property could be seen as an investment opportunity, as the property may appreciate over time, providing a potential return greater than your initial deposit so when the time comes to go your own way this may mean you have more equity/deposit to take with you for your next step on the ladder.

Cons:

Financial and emotional risks: If one party fails to meet their financial obligations, the other may be liable for the entire mortgage, putting the friendship and financial stability at risk.

If you can save up a small amount more, sometimes an 85% mortgage can be drastically different per month than a 90%. Consider all your subscriptions and see what you really really need. If you can give anything up, it can help your affordability. Don't fall in love with the property before you complete it, tough I know, but it's hard when you can't quite pull in enough cash to pay for it.
Talk to an adviser. High street isn't always the best choice.

1. Consider government schemes: The UK government offers several schemes to help first-time buyers, such as the Shared Ownership scheme and the Starter Home scheme.

2. Get pre-approved for a mortgage: Before you start house hunting, it's a good idea to get pre-approved for a mortgage so you know how much you can afford to borrow. This will also show sellers that you are a serious buyer.

3. Some mortgage lenders offer special schemes to help FTB's get onto the property ladder. Bank of Ireland for instance, offer a "First Start" scheme, 4 applicants may go onto the mortgage and the top two incomes are assessed.