Want to get on the property ladder? Your questions answered

1st October 2019

happy couple just moved in

Owning your own home is now the number one goal for many people. More important, in fact, than getting married, having children, and achieving financial stability. (1)

But getting on the property ladder can sometimes feel like an uphill struggle.

The average cost of a house bought by a first-time buyer has increased by 47% in 10 years. Yet average incomes grew by just 18% over the same period. (1)

And in July 2019 the typical deposit put down by first-time buyers increased by nearly 30% to £30,945 from the previous year. So saving for that elusive deposit isn’t getting any easier. (2)

We answer some of the most commonly googled questions about getting on the property ladder to help you achieve your dream.

How can I get on the property ladder?

Getting the keys to your own home might seem tricky, but there are very clear steps to getting there.

1) save for a deposit

2) improve your credit score

3) work out what you could afford

4) find a home

5) get a mortgage

If you can’t get your hands on a deposit, don’t worry as there are still plenty of options for you. So keep reading!

How can I get on the property ladder when I’m young?

Living at home longer can give you more time to save up for a deposit, provided you can find work locally.

Still living with your mum and dad when you’re a bit older isn’t something to be embarrassed about - lots of people are in the same boat. In fact, nearly 26% of people aged 20 to 34 lived with their parents in 2017. (4)

If you’re lucky, your parents might be able to gift you a deposit or loan you one.

And there are lots of other ways your parents could help you with a mortgage.

How can I get on the property ladder with no deposit?

There are some mortgages that don’t need a deposit, but you usually need the help of a family member to get one.

In September 2019 lenders like Lloyds Bank, Barclays, and the Post Office were offering this type of mortgage.

For example, with the Post Office’s Family Link mortgage, you borrow 90% of the money to buy the home as normal.

You borrow the remaining 10% as a mortgage secured against your family member’s home. It must be mortgage-free to be eligible.

The loan against your family member’s home is interest-free and you have to pay it off within five years.

How can I get on the property ladder in London?

Getting on the housing ladder is toughest in London, where in July 2019 the average house price was £477,813 compared to the UK average of £232,710. (5)

Despite house prices being eye-wateringly high in London compared to the rest of the country, if you’re determined to buy in the capital now could actually be a good time.

This is because prices have fallen by 1.4% in the year to July 2019 (5).

And with no sign that they’re going to take off again any time soon, you could be bullish about making an offer significantly below the asking price.

Prices in London vary widely, so put your budget into the search field of a property website to see where you could afford to live. You may find areas of London you’ve never considered before.

There can also be a marked difference in property prices between neighbouring postcodes. So have a good look at a map if there’s one area you’re particularly keen on.

If you’ve got your heart set on chic Blackheath village in SE3, for example, consider homes in the nearby streets of Lee where the SE12 postcode doesn’t have such a high premium.

Another thing to consider is buying with a friend, or group of friends, and taking out a joint mortgage.

Most joint mortgages are taken out by two people, though some lenders, such as Metro, TSB and Skipton allow up to four.

Is it better to get on the property ladder as soon as possible or wait until I have a bigger deposit or earn more?

If you’re paying a lot in rent, it’s probably worth getting on the property ladder as soon as you can. This is because it’s cheaper to buy than rent.

The smallest deposit you can put down for a widely available mortgage that doesn’t involve your parents is 5%.

This is known as a 95% LTV mortgage. LTV stands for loan-to-value and refers to the ratio of the loan compared to the value of the property.

The problem with high LTV mortgages is that their interest rates are generally higher than they would be if you put down a bigger deposit.

For example, if you choose a two-year fixed-rate mortgage, the average rate is 2.95% with a 95% LTV, but only 2.09% with a 90% LTV. (6)

This means the cost of your mortgage per month would be significantly cheaper with a 10% deposit compared to 5%.

(This cost just takes into account the interest rate. To know the true cost of your mortgage, you’d also need to consider fees and any incentives, such as a cashback.)

The other thing to consider if you take out a high LTV mortgage is that if house prices fall there’s a greater risk of your home falling into negative equity.

This is when the size of your loan becomes bigger than the value of your home.

You’re more at risk because the value of your home only needs to fall by 5% for your loan to be worth more than your house.


(1) Santander

(2) Experian, Credit Barometer

(3) UK Finance

(4) Civitas

(5) Office for National Statistics

(6) Bank of England

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