If you aim to get onto the property ladder in the UK, you have your work cut out for you, as a host of challenges await first time house buyers. And if you have aspirations for buying in London and aren’t rolling in money, you may be out of luck. In a January 2016 story for GQ Online, “devoted Londoner” Tony Parsons wrote, “If you did not clamber on the London property ladder in the 20th century, then the smart money says that you never will. You either have to rent or move to Hove.” Parsons added that what was once true of New York is even truer now of London: “if you can make it here then you can make it anywhere.”
Parsons may be overstating the case but not by much. And whether or not you dream of owning property in London, there’s no doubt that the UK housing market remains in crisis due to a number of factors that include population growth, soaring prices, and a shortage of affordable housing. But it’s not all gloomy news; as with nearly any crisis, there are winners as well as losers.
The media are filled with dire warnings that it will be harder than ever for first time house buyers to get on the property ladder in 2016, not only because of higher prices and lower inventory, but also because of stricter lending regulations. In East Anglia, for example, house prices are projected to rise by another 8 percent in 2016, and while this projected increase is the highest in the country, it is not higher by much. The average projected increase across Britain is forecast to be 6 percent, on top of the staggering increases we’ve already seen. Truly, if you presently own your house, you are probably rich. If you are looking to get onto the property ladder, you had better be rich.
In any case if the current prices of houses are any indication, those higher house prices aren’t bad news for everyone… only those who are looking to buy. Those who already own their homes will feel like the prettiest woman at the ball, with buyers fighting over the chance to court them, no matter where in Britain their house might be located.
Before you even begin searching out properties, you need to either make certain you have a half-million pounds languishing in an account somewhere or, if you are like the majority of folks, you need to get mortgage fit.
You should start by getting a good handle on your current financial condition. This goes well beyond knowing how much available cash you have in the bank, because that is only a small part of what prospective lenders will be looking at when deciding whether or not you are a good candidate for a loan.
Know and clean up any errors on your credit report – You don’t want to go through the whole process of shopping for a house and making an offer, only to be turned down for a mortgage. Go through your credit report line by line. See to it that any errors are corrected and take measures to bolster up any negative elements on the report. Pay down the debts that are either most burdensome or that charge high interest and can be paid off quickly. You need not pay off all your creditors; as a matter of fact, you should not do so, as having too little credit can be as worrying to prospective lenders as having too much. If you have little or no credit history, opening and reliably making payments on a couple of credit cards can make you appear more credit-worthy than having no debts at all.
Know your reasonable credit limits – Decide how much you can comfortably afford to pay every month on a mortgage, and don’t exceed that amount. There will always be unexpected expenses, both during the purchasing process and likely for the rest of your life.
Demonstrate stability in both employment and lifestyle – Being steadily employed is an essential element in proving your credit-worthiness, but it is not the only element by any means. Living at the same address is an important demonstration of stability in lenders’ eyes, as is being listed on the electoral roll. Even something as seemingly mundane as having long-running accounts with utilities, mobile phone networks, and the like all help to demonstrate a pattern of stability.
After you’ve gone through your finances, taken all the measures to demonstrate what a reliable customer you will be, and established yourself as a pillar of your little social community, you will need to go through everything again to make certain you’ve left no stone unturned. Precision and caution in preparing for the purchase, as well as ensuring that you have made no mistakes or omissions on your application paperwork are essential steps if you are to be successful in your efforts to become a home owner.
In every market there are “winners” and “losers”. Where the UK housing market is concerned the government is trying to fix things so there will be more winners, through such programmes as the Help to Buy and Help to Buy Isa, but the effectiveness of some of the newer schemes has yet to be determined. If you are determined to get on the property market, the task, while admittedly more difficult, is not impossible. It isn’t yet time to give up on that dream. Just be prepared for a few obstacles along the way.