First Time Buyers – Is Buying Always Better Than Renting?
Often, we see prospective first-time buyers in the dilemma of whether to buy or rent. According to a recent survey by Halifax, 372,000 First Time Buyers made their step onto the property ladder last year. This equates to half of all house purchases with a mortgage, making it the first time since 1995 that First Time Buyers have accounted for such a large share of the market.
Getting on the property ladder
It’s not unusual for home movers to be in two minds whether to make the leap (e.g. “I like my neighbours, but I’d like an extra bedroom”). However, this is the opposite of most potential First Time Buyers. When we ask them, they have a clear drive to get on the property ladder one day. As a result of this determination, they are often undeterred by external factors such as ongoing political events.
Whilst the housing market does suffer peaks and troughs, this hardly ever stops people who want to get onto the property ladder. Buying a property should always be classed as a long-term investment. And whilst it might not be ideal if your home drops in value, history suggests that when that does occur the prices go back up in the long run.
So buying is always better than renting for first-time buyers?
No, not necessarily.
Mortgages aren’t always the right answer. It is very much dependent on your circumstances. You may be surprised to hear we regularly encourage young people to rent when they first move out of home, especially if they are a couple. This is so that they can determine what type of property they want and if they can live together. However, the downside to this is that whilst you’re paying rent, it’s harder to save for a deposit.
It’s also worth noting that getting out of a mortgage can be difficult and sometimes expensive. Therefore, you must be sure that things are going to work out ok before you commit to one.
Small deposit mortgages
95% mortgages are more readily available now than they used to be. If you’re more than halfway to having the 5% deposit saved up, then it’s worth trying to get an Agreement in Principle in place. This will help you check that you will be eligible for a mortgage when the time comes.
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