With house prices on the rise and rental prices increasing, getting onto the property ladder is proving increasingly difficult for a number of people, particularly those who do not have a lot of disposable income to save for a house deposit after paying their regular expenses. In the UK capital, house prices are higher than the rest of the country, making getting onto the property ladder in London harder compared to anywhere else. But if you currently work and are living in London, buying a property here makes more sense. Thankfully, there are various schemes that you can take advantage of and different options to consider that will help you become a homeowner in London
How to Get Onto the Property Ladder in London:
Getting onto the property ladder in London is not easy, but there are various things that you can do to turn this idea into a reality for yourself. If you want to purchase a house in London, now is a great time for first-time buyers with falling prices across the capital due to Brexit and the COVID-19 crisis.
How to Get on the Property Ladder in London – What Are the Options?
When it comes to getting on the London property ladder, there are various options to consider to turn your dream into a reality.
Borrow From Parents:
While the bank of mum and dad might not be the solution for everybody, two-thirds of first-time London buyers are supported financially by their parents in some way. You might want to consider asking your parents to help you with your deposit, whether you are lucky enough to have parents who have put money away for your adulthood while you were a child, or if your parents are willing to lend you the money upfront to purchase your house with the agreement that you repay them later, helping you get on the property ladder faster. Even if you are in the one-third of London first-time buyers with parents who can’t afford to offer financial support with your deposit, you may be able to get on the property ladder faster if your parents agree to be guarantors on your mortgage, putting you at a higher chance of being accepted.
Buy With Others:
If you’re currently in a relationship, buying a house jointly with your partner could make it easier to get on the London property ladder since you can both save for a deposit together, and depending on your individual credit scores, income and employment histories, you may find it easier to be accepted for a joint mortgage application. However, while most people consider purchasing their first home with their spouse or long-term partner, if you are currently single, there is also the option to purchase a home with friends. Tenancy in common mortgage options are available for this situation, allowing you and a friend to each own 50% of the property rather than splitting a mortgage that is the sole responsibility of just one person. If you decide to go down this route, it’s important to make sure that you’re buying a property with somebody that you know well and trust.
Consider the Shared Ownership Scheme:
Shared ownership schemes are the ideal choice for people who are looking to purchase a house on their own and would otherwise take them a long time to save up for a deposit or be accepted for a mortgage on 100% of the property. The Shared Ownership scheme is becoming increasingly more popular in London and allows first-time buyers to buy a certain percentage of a property and pay rent on the other percentage, with the option to gradually purchase more of the property over time. This is an ideal way to get on the property ladder quickly since it requires a smaller deposit and mortgage to get the keys to your home.
Opt for a New Build Property:
New build properties are popular with first-time buyers and are often the ideal choice. Developers often offer equity loans for first-time buyers who are looking to buy newbuild properties since they do not have to spend time selling a current property before they can purchase the house and move in.
Rent to Buy Homes:
If you are currently renting in London, another option to consider that is designed to help you get on the property ladder quickly is rent-to-buy or leasing. This option allows you to move into the home as a tenant with the chance to purchase the property once this is possible for you. You may be required to pay a deposit, but this is typically smaller in this situation compared to the traditional route, with deposits often as low as 2% of the property value. And, you will also benefit from the fact that the purchase price will be agreed and fixed when you move in as a tenant, so you will not be affected by a rise in property prices during the time that you are renting.
Fixer-uppers are becoming more and more popular among first-time buyers and are often the best way to get a bargain property and your foot on the property ladder quickly. Auctions are the ideal places to find cheap homes in London that are in need of renovation but bear in mind that you’ll need to budget for renovating and fixing up the home once you’ve got the keys.
How to Get on the Property Ladder London – Best Areas for First-Time Buyers:
The average price paid for a property in London by first-time buyers is around £400,000, although first-time buyers this year could enjoy spending less thanks to prices falling in the capital. There are some areas of London that tend to be better choices for first-time buyers than others, which include:
This London area is affordable compared to most, making it a good place to get on the property ladder. The area has seen a lot of investment in recent years and you can find a semi-detached house priced at an average of £450,000 or spend an average of £300,000 on buying your first flat. There are plenty of different types of homes available from Victorian properties to newbuilds, and there are excellent transport links into the centre of London.
Located along the border of Essex, Harold Wood is a popular area in London with first-time buyers with a property price average that is lower than the London average at just under £370,000. It’s based in a prime location where you can easily get into the centre of London in less than an hour but is also close to Essex.
In East London, Manor Park is a hugely multicultural area that is often a top choice among those looking to get on the London property ladder. You can easily get to Central London from here with excellent transport links that can have you at Bond Street in just twenty minutes. The area is filled with inexpensive terraced homes that are the ideal choice for first-time buyers at flats sell for an average of just £270,000.
Stratford is an ideal London location for first-time buyers who are looking for a Shared Ownership property. While prices do come in higher than several other London areas, Stratford is home to more Shared Ownership properties compared to other London areas. You can easily get to Bond Street and Oxford Circus from Stratford with several Underground links to Central London.
This area has tons of different properties on offer making it a popular choice for first-time buyers. Whether you’re looking to purchase a small flat as a single person or want to invest in your first family home, you can find something for everybody. Shared Ownership scheme properties are also available for those looking to take this route, and the area is home to some of the biggest green spaces in London.
How to Get on the Property Ladder London – Saving for Your Deposit:
While the Help to Buy Scheme designed to provide assistance to first-time buyers has now come to an end, those looking to get on the property ladder in London can use a Lifetime ISA to get government assistance with saving for the deposit on their first home. With this ISA, you can save up to £4,000 yearly and the government will top up your savings with a 25% bonus up to a maximum of £1,000 per year towards your property deposit. You can use the Lifetime ISA in conjunction with other first-time buyers schemes such as Shared Ownership to help you get on the property ladder even faster. You can withdraw your savings and the government bonus when buying your first home.
While London might not be known as the cheapest area for first-time buyers to find a home, there are plenty of things that you can do to make getting on the property ladder in the capital easier.