Do second time buyers need assistance too?
The struggle of budgeting to buy your second home.
It is accepted that buying a home is expensive with many people struggling to get on to the property ladder. This is the case across the UK and it can be very difficult for prospective buyers to save the money they require to buy a home. Therefore, it is good news that there is a stronger level of assistance for first-time buyers.
An example of the level of support provided to first-time buyers is the removal of stamp duty when the price of property is less than £300,000. There is debate as to whether this is of benefit or not, with some sources saying this move will lead to property prices rising; but overall, there is positivity surrounding this support being offered to first-time buyers.
Saving for a house deposit can be difficult
However, what about existing homeowners who must save for a deposit to be able to buy their next home? There is an assumption that when someone steps on to the property ladder, they can progress upwards by selling their home and obtaining a new mortgage. This isn’t always the case, and it seems a growing number of property owners require assistance to move up the property ladder.
There has been a study undertaken by My House, which found that 25% of people owning their first home are looking for a gifted deposit in order to move up the property ladder. The “Bank of Mum and Dad” is commonly cited as a way for first-time buyers to get on to the property ladder, but it may be that second-steppers require this level of assistance too. The same study suggests that 14% of homeowners, who after buying their first home, have no intention of moving again until they retire. Around a third of respondents stated that they have no intention of moving unless they require a larger home.
The bigger the deposit, the easier it is to obtain a mortgage
There is no denying that the deposit is an essential component of buying property, and this now seems to be becoming more crucial for all buyers, not just first-time buyers. This means there will likely be an increased level of focus on how to save money to raise funds for a deposit.
Some of the most common tips offered to help people save for a deposit include:
- Stop renting and move back with your parents to save money
- Downsize your current property option
- Review your spending and look to save money wherever you can
- Review Help To Buy schemes to see if they can help
Of course, if you already own your home and you need to save for the deposit for your next purchase, many of these tips are unsuitable. When you own a home, you don’t have the option of going back to a parents’ home or a sibling, you need to make savings while paying off your current mortgage.
The fact that existing homeowners must save for a deposit is something that isn’t really being addressed in the industry, but it is something that more and more property owners are experiencing. There will not be the same sort of clamour to assist second-steppers as there is first-time buyers, but this is an area of the mortgage market that is likely to come under closer scrutiny in the near future.