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First-time buyers: How to tackle affordability challenges in 2024

Following a year of mortgage rate hikes, is 2024 going to be a better year for first-time buyers to make their move into homeownership?

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Mortgage broker Sarah Tinkler at Clever Mortgages shares her thoughts and offers advice to anyone about to make the move

If you are a first-time buyer (FTB) looking to get onto the property ladder, 2024 might just be the year you achieve your goals.

Economic conditions are looking more favourable this year, with falling interest rates and easing inflation helping to reduce the cost of borrowing for all would-be homeowners.

This is good news for any FTBs who may have put their dreams of homeownership on hold in 2023 as they waited for market conditions to improve. Indeed, forecasts suggest the Bank of England base rate will hit 4.5% by the end of 2024 – down from its current level of 5.25% – a sign that things are certainly heading in the right direction.

Interest rates are also unlikely to fall to the historically low levels seen in recent years so speaking to a mortgage broker and exploring all your borrowing options could help you get a foot on the property ladder sooner rather than later and ensure you don’t miss out on your homeownership dreams.

Homes at a discount

There are a number of different options available in the market for FTBs, including government-backed initiatives such as the First Homes Scheme. This has been specifically designed to help FTBs and key workers get onto the property ladder in their local area by offering homes at a discount of at least 30% compared to the market price. In some areas, this could be as high as 50%.

The scheme is aimed at those FTBs with an income of less than £80,000 (£90,000 in London) purchasing a property that costs no more than £420,000 in London, or £250,000 anywhere else in England, after the discount has been applied.

The discount also applies to all future sales of the property, enabling younger generations to further benefit from the scheme.

Mortgage options for first-time buyers

If the First Homes Scheme is not a suitable option for your circumstances, there are other products available to help FTBs and lower income earners get on to the property ladder.

For example, a 100% mortgage allows you to take out a loan for the full value of the property you are buying without having to put down a deposit. There are several products available in this market including Skipton Building Society’s Track Record mortgage and family deposit products from the likes of Barclays, Lloyds, Halifax and Nationwide.

They can be helpful if you do not have enough funds for a deposit but want to get on the property ladder sooner rather than later. You must be able to afford the monthly mortgage repayments and meet the lending criteria.

Another option that can help you boost your borrowing capacity is a Joint Borrower Sole Proprietor (JBSP) mortgage, which falls under the family assist range of mortgage products.

A JBSP works by letting you buy a property with the help of up to four people such as your parents or siblings, by using their income to increase the amount of money you can borrow.

This is a good option if your parents want to help you buy a property but do not want or have the money to provide a deposit.

Instead, they can be listed on the mortgage for affordability purposes to help you buy a home, which will be lived in, and owned, solely by you. You can then switch to a standard residential mortgage solely in your name when the deal expires should circumstances allow.

Other first-time buyer schemes to consider

Other options include Shared Ownership which allows you to buy a percentage of a property and rent the remaining share.

If you are a FTB looking to get on the property ladder in 2024, seeking advice from a specialist mortgage broker like Clever Mortgage can help you explore the options available in the market and find the best and most appropriate solution for your needs.

Mortgage brokers have access to a wide range of product offerings and have the experience and expertise required to guide you through the mortgage application process and put you on the path to successfully achieving your homeownership dreams.

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