With the average deposit now standing at £32,841 and annual house prices on the rise, affordability challenges are more prominent than ever before.
Many commentators believe that without the right solution, this group will continue to see a decline in opportunities to purchase a home of their own.
However, some lenders are already taking steps to allow the property-owning dream to become a reality for first time buyers who are under-served by mainstream lenders.
Exploring alternatives
Vida reported in September last year that FTBs are increasingly looking at options beyond government schemes to improve their chances of securing a mortgage.
In fact, a third of Vida’s first-time buyer applicants used gifted deposits from close relatives and two-thirds bought property with the help of up to three other family members or friends as part owners.
For single applicants buying on their own, having to save for the costs associated with purchasing a property can be a daunting prospect.
Similarly, a borrower’s income often is not enough to meet lenders’ standard mortgage multiples when applying for credit.
As a result, many are now considering the option of going in together with people they know they can live with, such as old student friends or even family members.
This option can make buying a home possible for many.
Not only will it help borrowers share the costs of the mortgage and household bills, but it could also end up being an investment in a future purchase if the property increases in value over the years.
In it together
To cater to this growing market, options have evolved where up to four applicants can purchase a home together.
This solution will not only help to make home ownership accessible to many who thought it was only a dream, but will also save many from the prospect of living in inappropriate accommodation.
The marketplace is becoming ever more complex as the idea of the perfect borrower becomes more and more unrealistic.
As an industry, we must be committed to coming up with creative and innovative solutions that cater to the changing needs of today’s aspiring homeowners.
