One of the interesting things I noted when visiting places in Europe such as France or Germany was that they don’t have the same fixation as us Brits do when it comes to owning the property they live in. In these countries, renting for the duration of your lifetime is not uncommon, and certainly not frowned upon either. The conclusion that could easily be drawn is that the UK public are, at the very least, more obsessed with making the leap onto the housing ladder than our European counterparts.
Then again, perhaps it is understandable given that renting isn’t always a barrel of laughs in this country. In fact, research last year showed that UK rents are the most expensive in Europe. Added to that, mortgages are comparatively very cheap compared to other European states, so the clamour for buying becomes a whole lot more understandable when you look at it that way.
So, how to get there?
The housing crisis and ISAs
In recognition of the soaring costs of property and the so-called housing crisis, Government has stepped in by offering a new Help-to-Buy ISA. With this account, you can save up to £200 a month and receive a free top up of £50 (25%) from the government. Over the course of five years, this amounts to a maximum in ‘free money’ of £3,000, which certainly helps the cause when making your first ever deposit.
Additionally, a new type of ISA known as the Lifetime ISA goes live next April, and this scheme will also involve a 25% top up on savings from the state, and allows a free withdrawal if the money is being used to buy a first home.
Weighing up all the costs
Ultimately, even with the help of these ISA bonuses, the same old principles of disciplined saving will be required in order to get you over the line in terms of making that first deposit. But it’s important to bear in mind that the deposit is by no means the finishing line. You’ll also need to ensure you have sufficient reserves for things like surveys, solicitors’ fees, agency fees, stamp duty, removal costs and more.
Also, chances are the home you’ve bought might not be the finished article in your eyes, and may need renovations or enhancements. In this case, low-interest home improvement loans are easy to get, and, given that they are geared towards something that ultimately adds value, may be a viable option. But it is an additional line of credit nonetheless, and it’s important to weigh these kinds of things up first.
So when should we go for it?
Of course, the first thing to do is to work out your budget. The more the value of your reserves exceeds the cost of the deposit, the better. You need to factor in that maintenance and repairs will fall on you as a homeowner from now on too, not a landlord. You’ll also be locked into a mortgage, which doesn’t have the same flexibility as renting (ie: it’s a lot harder to downgrade or move if you fall on hard times if you’re a homeowner as opposed to a tenant).
None of this is to put you off, but merely to make sure that you take into account all the possible scenarios, so that when you do find the place of your dreams and decide to go for it, you can do so with the utmost confidence that you are making the right choice.
Being handed the keys is one of the most rewarding experiences there is, and there aren’t many feelings that can match walking through the front door for the first time knowing that it is your home – one that will be the place of many happy memories for you and your family for the future. If it’s something you’ve been saving towards for a long time, here’s wishing that your dreams come true very soon!