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Five tips to help you up the property ladder

Date: 11 January 2022

4 minute read

Over the past two years, the pandemic has had a big impact on the property market due to government initiatives, changes in behaviours and therefore buyer requirements. We have seen record-breaking house price inflation, huge numbers of property sales, and a surge of home buyers partaking in a ‘race for space’.

While the property market has been turbulent, for many people purchasing a first home, upsizing, or perhaps buying a second property, remain key life goals. If that is the case, there are several things you can do to ensure you put your best foot forward when approaching the property ladder.

Karen Noye, mortgage expert at Quilter has the following tips for buying a home:

Make a plan

“Buying a home is no easy feat, and it requires careful planning and consideration. You should first decide what sort of property it is that you would like, where you wish to live and when it is you would like to move. Particularly for first time buyers, this can help you gain a better understanding of how much of a deposit you will need to save for.

“The latest Nationwide House Price Index shows the average UK house price in December hit a record high of £254,822. According to Nationwide’s data, 2021 was the strongest calendar year in terms of house price growth performance since 2006. Particularly with house prices currently remaining inflated in comparison to pre-pandemic levels, it is highly advisable to seek financial advice or consult a mortgage broker to help ensure you make the best choices and plan appropriately for your personal circumstances.”

Understand and arrange your finances

“Lenders carefully check affordability, so it is important to understand the state of your finances. Applying for a mortgage or remortgaging provides an ideal time to tidy up your finances.

“By paying off any debts or renegotiating on bills and contracts, you may be able to boost the amount you can borrow. This can also help with saving for a deposit or moving costs, as cutting back where possible may mean you can save more each month.

“Additionally, your credit score is an important factor when considering a mortgage and getting a credit report completed first can prove invaluable. This will give you your credit score and provide detailed information on your credit history and finances. If you have a poor credit history or want to improve your credit rating there are a number of strategies that can help including, but not limited to, keeping repayments up to date, reducing the amount of debt you have, being on the electoral roll and closing unused credit accounts/cards.”

Make your money work for you

“Once you have a plan of your time horizons, you can identify the best savings accounts where needed and be active in seeking the best interest rates. If you are looking to save for a deposit or home purchase over a longer period, you may wish to consider investing. When investing for a number of years, your money has a greater chance at growing above the rate of inflation; however, with investing, it is important to remember your capital is at risk and you could get back less than you invested.

Consider government support schemes

“A Lifetime ISA (LISA) could be a good option if you are saving for a deposit for your first home. When saving into a Lifetime ISA, you receive a 25% bonus from the government on up to £4,000 each year. You need to remember though that there are quite a few rules around LISAs, especially when it comes to withdrawing your money; you can find out more on the Government’s Lifetime ISA webpage.

Alternatively, it may also be worth checking what else you are eligible for. For example, the Help to Buy equity loan scheme provides you with a government loan to get on the housing ladder meaning you need less of a deposit, and the government’s ‘mortgage guarantee scheme’ is available to more than just first time buyers. A mortgage broker can help identify what is suitable for you.”

Seek advice from a mortgage broker

“As with any big life purchase, it is advisable to seek professional help. Mortgage brokers can help you understand how much you might be able to borrow, help find the best deals, identify a suitable mortgage for your circumstances and make the whole process much smoother.”

For further tips on how to manage your finances, read ‘How to take control of your finances with a yearly budget’.