Many mortgage suppliers no longer work on income multipliers, but on affordability. They work out what other forms of outgoing you have (car loans, student loans, council taxes) etc before they commit to a figure. Those golden days of 100% mortgages are over, as too are interest free mortgages meaning capital repayments with a substantial deposit of 10 to 25% are the new norm.
Schemes like Help to Buy, a government equity scheme on new builds for first time buyers, have been a great success in reducing deposits to 5%.
A new build of say £200,000 would require a £10,000 deposit which may be still difficult for younger buyers to save up for.
Renting is often the only option.
Generation Rent is no longer restricted to 18 to 25 year olds; statistically purchasing a home has become a problem for anyone under the age of 45. The reasons for this are clear: salary increases have slowed in recent years in the public and private sectors, mortgage criteria for approval have tightened and finally house prices themselves.
Last year, a survey by The Independent found that the average deposit and age of property buyers have risen - from £600 in the 1960s to £20,000 now. Buyers are now 7 years older, as well.
There’s regional differences that come into play.
If you work in London and need a base there, rent is many people’s only option. Prices are high in the south and here in the east, generally meaning a large deposit, good salary and mortgage acceptance are three hurdles potential homebuyers have to leap across (or stumble through).
The case for renting in the east is less pronounced - no doubt that property prices in central Norwich, Cambridge and Holt, to name but three, are steep.
There’s other reasons too:
- Your monthly repayments go towards buying your home, not into a landlord's bank account. Your mortgage debt decreases with capital repayments.
- You own your home at the end of the mortgage's term, and can then live rent free or sell and capitalise on the accrued equity.
- You can have pets in your own home - something many tenants aren’t allowed
- You won’t be forced to move house when a landlord wants to sell.
- You can extend, improve, decorate to your own taste.
Pure North Norfolk specialise in selling and letting properties from our base in Fakenham and if you need any advice, please contact us at your earliest convenience.