If you've been thinking about buying, though, perhaps you are ready to become a hunter of a first home. What you must do is identify whether this is the right move for you and whether it's the right time to buy a home. Only you will know, and much depends on your own personal circumstances. A good way to work out if this is the right move for you right now is to ask the following questions. If you can't say yes to the majority of them, then maybe you need to hang on for a bit longer.
Are you ready?
Do you have enough money to buy a home? How likely is it you will be able to borrow money to buy your home? Is it tax efficient for you to buy now? Does it make sense for you to make this move now? Will you be in one spot long enough to make it worthwhile? Are you eager to put down roots? Can you cope with the responsibilities involved? Are you happy to make the commitment to be a home-owner?
You do need to be careful that you are buying a home for the right reasons. I believe some people feel it's what they should be doing by a certain age or when they get married. Also, you might feel pressure from friends and family. If a number of your friends are buying their first home, or your mother thinks it's time you 'settle down' - these might not be the best reasons for you to be thinking of scrambling onto the property ladder.
Is it a good time to buy?
You could probably rightly argue that this is a bad time for first-time buyers to be trying to get any form of permanent accommodation. Some experts even believe the UK is in danger of creating an entire generation of people who will never be able to buy their own homes. Unless you have wealthy parents or are in a highly paid job, you'll probably have to save for decades, suggests a recent study from the University of York.
One problem is saving enough for a deposit. Until the last few years, a number of people could borrow 90-100% of their home's worth without a great deal of trouble. But now a bank or building society is unlikely to consider lending money to a buyer unless they've saved at least a minimum of 25% of the price of the home. Many are even demanding more - 25-50% in some cases.
It can be difficult for many first-timers to come up with this sort of cash, despite saving for long periods of time. Inevitably, parents and grandparents often end up helping out. Four out of five first-time buyers under the age of 30 currently get help with deposits (the cash you put down on a mortgage) from their parents - the Banks of Mum and Dad, as the newspapers call it.
But these days, even the Bank of Mum and Dad is restrained by now much it can hand over. The 'sandwich generation' - those that find themselves caring for both their children and their parents - has to decide whether to spend its saving on long-term care for their sons and daughters acquire educations and property of their own. A recent report by Oxford Economics said if younger people had to save up to a 20% deposit it would take them on average 40 years to do so.
Also, the average age of a first-time buyer not given a helping hand by affluent parents has risen sharply. Back in 2007, when the credit crunch started, the average age of a first-time buyer was 33. By April 2009, the average age rose to 36. Many property experts estimate it is more likely to be closer to 37 or 38 by now. And while the number of first-timers has remained at about the same rate over the last three years (80,200 in 2006, contrasting with 80,700 in 2009), those not vein any financial assistance by their parents has dropped from 120,900 to only 20,200 over the same period of time.
This might make depressing reading for some, but it's important to know where first-time buyers stand. And it's not all bad news. The property market needs first-time buyers to keep the whole buying and selling process going. If there's no one at the bottom of the property ladder, it can severely restrict movement up and down the rugs, affecting everyone from young families and downsizers (those wanting to move down to smaller homes), to retirees leaving family homes for the last time.
Surely, it can often be a struggle to come up with the cash for a deposit on a property, let alone cough up mortgage payments every month. But first-time buyers have always lamented how hard it is to get that first property. Even in tougher times, many have somehow accomplished this feat.
Your parents' generation made quite large sacrifices to buy their first home. I believe the difference now is that most people are not used to waiting for things. If you want the latest plasma scree, you hand over your credit card and บ้านมือสอง take one home. Equally, if you feel like going out for dinner, you do so. Earlier generations tended to save up to get married and buy a first home.
In difficult economic times, it might not be so easy to splash the cash readily, and one must feel sympathy for young first-time buyers with other debts that their parents and grandparents might not have accrued. For example, many first-time buyers today are trying to pay off students loans, and day-to-day costs and standards of living were generally lower in the past. Now, you're hard-pushed to get by without the presumed 'basics' of a laptop, mobile and other technology required for work and play.
Equally, people are settling down later, moving around more and not sticking in the same jobs for lengthy periods of time. In the past, it was assumed most people would work in the same job in the same company for life, or most of their life, anyway. In today's society, many workers will reinvent themselves and change jobs frequently over the course of their career, which means a very mobile workforce travelling internationally and upping stick a great deal more than previous generations.
Not having a job for life and travelling to different jobs and places has an effect on our house-buying patterns. But despite living in these volatile, changing times, I would still encourage everyone who can to get on the property ladder as soon as possible. All the time you're paying rent, you're paying someone else's mortgage, which does not benefit you in the slightest. If the costs are relatively similar, why not pay off your own mortgage?
I would approach buying a first home as a reasonable medium-term decision. You can always rent your home out for a year if you do go to work in another city or country. It gives you an asset, and I think there's a lot to be gained from the personal comfort and security of knowing that's home and that's mine. And when it comes to building up a credit rating (how you are rated when it comes to borrowing money, there's no better way than owning a home and making regular payments on it. It will make it easier to get a loan for a car or another property one day.
And don't get bogged down with thinking your first home has to be perfect. It doesn't have to be what I call 'forever house' - the place where you will ultimately spend the greatest proportion of your life. Some first-time buyers have told me that if they can't buy what they want, then they won't bother at all. This seems to be a bit blinkered to me, as this is your first home and a start in life, after all. It might not be ideal and should be equated to your first car. Most of us probably won't be in a position to pick up the latest BMW or Mercedes as a first motoring purchase, so why would you expect to walk into a snazzy penthouse or large country rectory?
Besides, life can pass you by if you're always waiting for the perfect job, the perfect relationship and the perfect home. You will have to compromise on something- even the very wealthy don't always get everything they want - and I seriously think it's better to get something rather than miss the boat and end up with nothing at all. Further on I want to explain how you can get the best you can, even if you have limited funds. Through tips, advice, case studies, and contracts - I want to help you acquire a good first home that you will enjoy and benefit from when it comes time to move on.
And even if you feel it's a bit premature for you to be looking for a first home quite yet, do remember everything takes time. I find many first-timers underestimate the time it takes to get a home and actually move in. If you say you want to be in a flat by Christmas and start looking in September, I doubt you'll pull it off. If you want to be in by Christmas, you most likely need to start looking at least six months earlier.
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