In the past few years, first-time buyers have seen optimistic changes to the home-buying process: help-to-buy ISAs, rent-to-buy homes, affordable housing, and 95% mortgages.
However, this looks like an impossible task again with new changes coming in: Nationwide (one of the biggest leaders in the UK) have slashed their 95% mortgages for an 85% one. This means that buyers will need to put down triple the deposit they otherwise would have.
Say you’re a first-time buyer looking to buy a £200,000 house. At the previous 95% mortgage, the 5% you’re paying is £10,000. While this is a big ask, it’s not impossible.
Now, imagine you’re buying that same house at an 85% mortgage. Now, you’re paying a 15% deposit, which doesn’t sound like much extra. But, this would mean a deposit of £30,000.
Does it sound possible for a young person, already paying rent and other bills, to save this much money? They probably won’t even earn that much in a year, let alone be able to save it.
So, for first-time buyers it’s back to the bank of mum and dad, who also have their own bills to pay, and probably don’t have a spare £30,000 laying around.
Still think it’s avocado toast that’s holding them back?
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