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In 1995, 65% of 25-34-year olds owned their own home.<\/p>\n
With Bank of England (BoE) base rates above 6% at the time (Source: Bank of England (BoE)), <\/a>\u00a0today\u2019s low interest rates should be a blessing to young adults.<\/p>\n However, just a quarter (25%) of people born in the late 80s owned their own home by the age of 27, according to research from the Institute of Fiscal Studies<\/a>.<\/p>\n As interest rates have fallen, so has the number of middle-income, young adult homeowners.<\/p>\n What is holding first-time buyers back?<\/strong><\/p>\n There are three key issues facing first-time buyers:<\/p>\n House prices: <\/strong>The average house price rose by 125% between 1995\/96 and 2015\/16<\/p>\n Income levels: <\/strong>Average household income increased by just 22% in the same period<\/p>\n Living costs: <\/strong>Inflation, as measured by the Consumer Price Index (CPI) means that the cost of living has almost doubled since 1995 (Source: Office for National Statistics (ONS))<\/a><\/p>\n So, for the average 25-34-year old, saving a deposit for a mortgage whilst:<\/p>\n Isn\u2019t an easy combination.<\/p>\n However, help is at hand.<\/p>\n Possible solutions<\/strong><\/p>\n Buying a home isn\u2019t as easy as it used to be, but that doesn\u2019t make it impossible. There are three possible solutions to consider:<\/p>\n 1. Take advantage of financial products and schemes<\/strong><\/p>\n Certain products and schemes can make buying your first home more accessible. These include:<\/p>\n Lifetime ISA<\/strong><\/p>\n A Lifetime ISA is a tax-efficient way to save money toward buying your first home. Each year, you can deposit up to \u00a34,000, and the government will top up your savings with a 25% bonus.<\/p>\n Lifetime ISAs are available in both Cash and Stocks & Shares options. Cash ISAs are available from banks and building societies and interest is added to your savings, while Stock & Shares ISAs should be seen as investments where the value can fall as well as rise. For most people, saving for a house deposit is a relatively short-term endeavour, therefore using a Cash ISA, where there is no risk of the value falling, is probably more appropriate.<\/p>\n Capital saved in a Lifetime ISA is intended to be used for two purposes:<\/p>\n Withdrawing money for any other reason will incur a 25% penalty, which will eat into your deposits, as well as losing your government bonus.<\/p>\n Low-deposit mortgages<\/strong><\/p>\n Saving 10% of the value of a property is one of the biggest hurdles facing first-time buyers. However, with a 95% mortgage, you only need a 5% deposit. That will still require some saving and budgeting but will be easier to achieve for most people.<\/p>\n 95% mortgages are becoming more and more popular, with most banks and building societies offering them. Some even offer 100% mortgages \u2013 requiring no deposit.<\/p>\n 100% mortgages often require a \u2018family springboard\u2019; that is, a lump sum covering a portion of the property value, to be available as a guarantee for any defaulted mortgage payments.<\/p>\n Lower deposits will often mean higher repayments and interest rates, as the bank is taking a bigger risk and the overall amount you are borrowing is higher.<\/p>\n Help to Buy: Shared Ownership<\/strong><\/p>\n Shared Ownership is exactly what it sounds like. You own part of your home but pay rent on the rest. This is a good way to get a toe on the property ladder, while working toward fully owning your home.<\/p>\n Help to Buy: Shared Ownership<\/a> is a government initiative which allows you to buy 25% to 75% of a property from a housing association and paying rent on the percentage that remains with them.<\/p>\n To be eligible for the scheme, you must:<\/p>\n Similar schemes are available for older buyers and people with disabilities.<\/p>\n 2. Ask for help<\/strong><\/p>\n Even with products and government schemes available to help you get onto the housing ladder, it can still seem impossible to go it alone.<\/p>\n If you are lucky enough to have family members who are willing to put some money toward your deposit, don\u2019t be afraid to take them up on their offer.<\/p>\n It is important to discuss the terms of their offer and make sure that both parties are clear whether it is a loan or a gift. You may even want to make a written agreement to keep things running smoothly.<\/p>\n 3. Seek financial advice<\/strong><\/p>\n Talk to a professional about your financial situation and both your short-term and long-term goals. Not only will an independent financial adviser be able to build a financial plan and tell you about products you may not have heard of, but they will also be able to offer support and knowledge. This will give you a heightened sense of confidence in managing your finances and buying your first home.<\/p>\n Ready to start working toward buying your first home? Give us a call.<\/p>\n Your home maybe repossessed if you do not keep up repayment on your mortgage.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" In 1995, 65% of 25-34-year olds owned their own home. With Bank of England (BoE) base rates above 6% at the time (Source: Bank of England (BoE)), \u00a0today\u2019s low interest rates should be a blessing to young adults. However, just a quarter (25%) of people born in the late 80s owned their own home by … Continue reading “When interest rates are so low, why are millions of people locked out of buying a home?”<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/posts\/585"}],"collection":[{"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=585"}],"version-history":[{"count":0,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/posts\/585\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.arkenstonewealth.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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