Introduction

For many young people in the UK, buying a home can feel like an impossible challenge, particularly for those living in the South of England or those purchasing on their own. The average age of a first-time buyer is now between 30 and 35, depending on location, and this figure continues to rise.

However, while there are significant obstacles, homeownership is still achievable with the right approach. In this guide, we explore the key challenges facing young buyers and discuss potential solutions to help overcome them.

Is It Harder to Save for a Deposit?

One of the biggest hurdles to buying a home is saving for a deposit. With high rental costs and the cost of living rising, setting aside money for a deposit can be tough.

However, deposit requirements have actually eased in recent years. It’s now possible to get a mortgage with just a 5% deposit, whereas 10 years ago, most lenders required a minimum of 10%. Some lenders even offer 100% mortgages, though these come with strict conditions and are less common.

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Additionally, first-time buyers can take advantage of government-backed savings schemes to boost their deposit. The Lifetime ISA (LISA) allows individuals to save up to £4,000 per year, with the government adding a 25% bonus. Other schemes, such as Help to Buy ISAs, though now closed to new applicants, still allow existing users to benefit from government contributions. These savings methods can significantly enhance deposit funds and improve affordability.

While deposit requirements have lowered, rising house prices continue to make saving a challenge. The key is to start saving early, take advantage of government schemes, and explore options like joint ownership or guarantor mortgages.

Are Rents Too High to Save for a Deposit?

There’s no denying that rent prices have increased significantly. The average rent in England is now higher than ever, with London seeing even steeper rises. High rental costs leave many people struggling to save for a deposit, creating a cycle where renting prevents homeownership.

A recent survey found that 70% of renters don’t expect to buy a home within the next three years. However, solutions such as shared ownership, rent-to-buy schemes, and living with family to save can help break this cycle.

Are Mortgage Payments Too High?

At present, mortgage rates are around the mid-4% range, which is relatively high compared to the past decade. However, mortgage lenders now offer more flexible terms, including 40-year mortgages and lending up to age 75 or even 80.

Extending the mortgage term can significantly lower monthly payments, making it more affordable. However, buyers need to consider the overall cost of borrowing over a longer period.

Can People Borrow Enough to Buy a Home?

Historically, lenders would offer mortgages at around 4.5 to 5 times an applicant’s income. However, it’s now becoming more common for lenders to consider 5.5 or even 6 times income, particularly for first-time buyers.

While higher income multiples can make it easier to borrow more, lenders now have stricter affordability checks. Unlike in the past when self-certification was common, today’s applicants need to provide full proof of income and financial stability. This means those with stable earnings may find it easier to get a mortgage, while those with irregular incomes might face challenges.

Is It Harder to Get on the Property Ladder Than Before?

There’s no doubt that getting onto the property ladder has become more challenging. House prices have risen faster than wages, making it more difficult for young buyers to afford a home. However, there are now more mortgage products and government schemes available to help first-time buyers.

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What Are the Solutions?

While challenges exist, there are several ways to improve your chances of buying a home:

• Take Advantage of Government Schemes – Help to Buy, shared ownership, and First Homes schemes can make buying a home more accessible.
• Utilise Savings and Deposit Schemes – A Lifetime ISA (LISA) or Help to Buy ISA can boost savings with government contributions.
• Consider Alternative Locations – Buying outside major cities or in up-and-coming areas can provide more affordable options.
• Extend Mortgage Terms – Spreading mortgage payments over a longer period can reduce monthly costs and improve affordability.
• Joint Mortgages or Guarantor Mortgages – Buying with a partner, family member, or using a guarantor can increase borrowing potential.
• Improve Your Credit Score – A strong credit score improves your mortgage prospects and can help secure better rates.
• Speak to a Mortgage Broker – A professional broker, like Strive Mortgages, can help you understand your options and find the best deals.

Conclusion

Buying a home as a young person is certainly more challenging than in previous generations, but it is still possible. The key is to start planning early, explore all available options, and take proactive steps to improve financial standing.

If you’re unsure where to start, speaking to a mortgage broker can provide clarity and guidance. Strive Mortgages specialises in helping first-time buyers navigate the mortgage process and find the best solutions tailored to their circumstances.

Ready to take the next step? Contact Strive Mortgages today to explore your options and get expert advice on buying your first home.