Tips and advice for getting on the property ladder

Getting your foot on the property ladder can seem daunting, but it doesn’t have to be, once you read our tips and advice.

How do you make your dream of buying your first home a reality?

With UK house prices continuing to rise – official figures from the Office for National Statistics based on mortgage completions puts the average house price at a hefty £264,000 (2023) – and with demand outstripping supply, owning your own home is far from easy – but it’s not impossible.

There’s no doubt that buying your first property has become increasingly difficult over recent decades. In 1981, nearly one in three 16-24-year-olds was a homeowner. By 2016, it was one in 10. Meanwhile, the proportion of renters in younger age groups has increased by 14% among 16-24-year-olds since 1996.

This trend may mean you’ll have to wait a little longer to become a homeowner. Since 2007, the average age of first-time buyer in the UK has increased by six years, with people turning 34 by the time they’ve bought their first property.

However, with planning, research and a little know-how, one day you too can have a home that you own.

The best place to start is by putting together a plan of action so you can break out of the rental cycle. After all, when you get a mortgage, every payment you make takes you a step closer to owning the property outright – even if the process does take 25 years.

If you’re a tenant, every rent payment you make is income for your landlord.

So, if you’re determined to make that leap from renter to homeowner and get on the property ladder, check out these six top tips:

1. Pay off any outstanding debts

Put together a list of all your credit card, store card, overdraft and loan debts and check how much you owe on each and what you’re paying each month. It might be worth considering a consolidation loan to pay off everything you owe.

Work out a budget so you know how much you have left each month after paying your essential rent and utility bills and everyday living costs to cover food, petrol etc. What’s left is your ‘available income’.

Rein in luxuries such as takeaways on speed dial and pricey nights out, and check your standing orders – are there monthly subscriptions that you’ve forgotten about? Or membership to a gym you never go to? Use your available income to knock your debts into touch. And, once they’re gone, you can start putting the cash away towards your deposit.

2. Improve your credit score 

Before you think about applying for a mortgage, get a copy of your credit report (held by credit reference agencies such as Experian, Equifax or TransUnion) so you can see what lenders see when they review your application. Impact partners with checkmyfile, but other credit reporting agencies are available online.

If your credit rating needs a boost, there are various ways to improve it, such as closing down credit card accounts which you no longer use, clearing outstanding debts, paying your bills on time and checking you’re on the electoral roll.

3. Secure your job status 

If you’ve got a steady job, great. That’s exactly what mortgage lenders are looking for. If not, put all your time an effort into finding secure employment as this really will pay off when you start filling in mortgage applications.

Most lenders will want to see that you’ve been with your employer for a reasonable length of time – at least six months before applying. So, if you’re thinking of switching jobs, consider hanging on until you’ve got your mortgage in place.

4. Sort out your deposit

When it comes to deposits, it’s a case of the bigger the better. The more cash you can put on the table, the bigger choice of best-rate mortgages you’ll have.

If you can’t see a way of raising enough of a deposit on your own, why not consider buying with someone else who’s in the same boat? This could boost your chances of securing a better mortgage deal, particularly if they have a good credit history and earn more than you. However, before you commit, you’ll both need to decide what would happen if one of you wanted to move in the future.

If you’re saving hard but it’s taking a long time to reach your goal, perhaps your parents or other family members would be willing to help you get on the property ladder? This is known as a ‘gifted deposit’ and you’ll have to prove the money is a gift and not a loan, with some lenders requiring a ‘gifted deposit letter’ to be completed and signed by the person giving the cash. It’s important to note that, If the person who gives you the money dies within seven years, you’ll have to pay inheritance tax on it.

5. Get help from the professionals 

If you’re struggling to find the best mortgage for your situation, uncertain about how much you can borrow, don’t have a deposit, or are unsure about your eligibility – something which can be a concern for people aged 40 plus – enlist the services of an experienced mortgage broker.

Not only can they search for deals that are not available on the open market, but they can also improve your chances of being accepted for a mortgage as they’ll know which lenders are best suited to your particular circumstances.

In fact, if you’re a first-time buyer, then you have the most to gain from mortgage advice, as, not only is the whole process new to you – you’ll need things such as proof of income, or accounts if you’re self-employed – but the application process also tends to be more challenging.

By helping you prepare for your application, a mortgage adviser can boost your chances of success. This is key because every unsuccessful mortgage application may harm your chances next time around, as each refusal will appear on your credit record. Using a mortgage broker like Impact SF will maximise your chances of being accepted first time.