First time buyers looking at a year’s salary for deposit
Before the global credit crisis made its way to the UK many first time buyers were blessed with the ability to be able to get not only a mortgage with ease but also a mortgage that did not require any deposit. In fact, many first time buyers were able to get a mortgage for more than the value of the home that they were buying, giving them enough cash left over to furnish or renovate the property.
However, over the past few years this has all changed, and first time buyers have found themselves in an increasingly difficult position, leaving many of them unable to consider getting onto the property market. Whist property prices may have come down they are still high enough to keep the average first time buyer off that first rung of the property ladder. Mortgages have become increasingly difficult to come by, as lenders exercise increased caution over who they are prepared to grant loans to. When it comes to deposits first time buyers have well and truly found themselves in a difficult position, with lenders demanding a large percentage by way of a deposit to consider the buyer for a mortgage.
In fact, the level of deposit has soared over recent years, and this is one of the main reasons why so many first time buyers are struggling to get onto the property ladder. In 2007, prior to the onset of the global financial crisis, the average deposit required by a first time buyer was £12700. However, this has now soared to £31,500, which means that the average first time buyers will need significantly more than a year’s salary to be able to put down a deposit.
The government is calling on various housing and lending bodies to help first time buyers, and the Housing Minister Grant Shapps has met with various bodies to discuss the problems that now face first time buyers. It is thought that around 1.4 million households are keen to own their own property but are affected by the squeeze on mortgages. Shapps spent time discussing issues such as new products that may be able to help first time buyers, specialist insurance for lenders, and shared equity schemes for first time buyers.
Tags: cash, United Kingdom, difficult position, grant shapps, home, good salary, time buyers, generationShapps said: “I do not want to see the current generation completely locked out of the market. The pendulum has swung too far the other way, where even if you have a good salary and save to get a deposit, you still cannot get a deposit.”
