For the first time the average home costs more than £250,000 after a 10.2% price increase over last year. Covid-19 has acted as a major catalyst for this and has caused prices to rise by over £30,000 since the beginning of the pandemic.
The pandemic has had this affect as buyers have been looking to buy homes with larger indoor and outdoor areas.
Homes fitting these criteria are more commonly found in rural and coastal areas. Furthermore, these areas are even more attractive by giving buyers an escape from the packed cities with a higher concentration of Covid-19 cases.
This immense competition for this type of home has been a major factor in driving up the average house price.
There has been widespread speculation that mortgage rates will soon rise. Rising mortgage rates combined with the huge increases in prices over the last year mean first time buyers are in a tougher place than ever before seen. To counter this first-time buyers must be equally smarter than ever before with their money.
If you are a first time buyer, there are some schemes available for you.
Help to Buy: Equity Loan
this is only available for first time buyers, who want to buy a ‘new build’ property in their local area. You will need a 5% deposit to access this scheme and then you are able to borrow (subject to credit score) up to 20% (40% in London) of the purchase price of the property.
This loan is interest free for 5 years, you’ll then have to pay on year 6 on the original amount borrowed.
LISA (Lifetime ISA)
A lifetime ISA is a tax free savings account. You can use the capital to purchase a new home as long as it’s worth less than £450k. You can put into the LISA up to £4000 per annum – up to the age of 50.
The great thing with a LISA is the government will give you up to 25% (max £1000 per year).
People who are buying the same property can apply their LISA to the same home.
Help to buy: Mortgage Guarantee
so this one is more for the lender opposed to the individual purchasing the property. with just 5% deposit the scheme guarantees the lender that they are repaid in the event of repossession.
If you’re a first-time buyer or someone else effected by the rapid rise in house prices and impending rise in mortgage rates please get in touch!