Almost Half of First-Time Buyers Get Help From a Government Scheme

by | Tuesday 16th Jan 2024 | Mortgage News

In the world of rising living costs, the journey to homeownership is a bit of a financial puzzle for many first-time buyers. A recent survey by Uswitch Mortgages sheds light on the strategies employed by these buyers to step onto the property ladder and the often-overlooked additional costs that catch them by surprise.

Government Support Takes Centre Stage For First-Time Buyers

The Uswitch survey reveals that 45% of first-time buyers successfully secured their homes with the assistance of government schemes. Notably, the First Homes scheme emerged as the most popular, providing a 30 to 50% discount on property market value. Uswitch mortgage expert Kellie Steed highlights the importance of exploring alternatives, as the well-known Help to Buy equity loan scheme is no longer available in most parts of the UK.

Traditional Mortgages Remain a Staple For First-Time Buyers

Traditional mortgages, secured by 44% of first-time buyers, continue to be a prevalent avenue. Of those, 38% opted for standard variable-rate mortgages, while 32% chose fixed-rate mortgages. Surprisingly, a significant 34% turned to the ‘bank of mum and dad,’ with 24% receiving loans for deposits and 10% benefiting from financial gifts.

Overlooking Additional Costs: A Common Pitfall

While the survey uncovered common methods to secure properties, it also highlighted a concerning trend – first-time buyers often underestimate the additional costs associated with homeownership. Kellie Steed emphasizes the importance of considering not only mortgage rates but also fees, such as arrangement fees, legal fees, and survey costs.

Ignorance on Additional Expenses

The survey unveiled startling figures about the lack of awareness regarding various costs:

– Only 7% were aware of mortgage admin fees.

– A staggering 79% were unaware of stamp duty costs, despite a relief measure for first-time buyers in England and Northern Ireland.

– Less than half (45%) were aware of survey costs.

– Only 40% were aware of conveyancing fees, which can range from £800 to £2000.

Expert Tips for Prospective Homeowners

Kellie Steed, Uswitch mortgage expert, offers valuable tips for first-time buyers:

  1. Budgeting for Additional Costs: Factor in all expenses related to property purchase, including admin fees, surveying, land registry fees, insurance, utilities, and council tax.
  2. Choosing the Right Mortgage: Seek professional advice to determine the mortgage type that aligns with your financial stability, preferences, and long-term plans.
  3. Preparing for the Property Search: Define non-negotiable property features, create a checklist for viewings, and ask essential questions to estate agents.

Speak To a Mortgage Advisor in 2024

In a housing market fraught with challenges, arming yourself with knowledge about both the avenues for financial assistance and the often-overlooked costs is crucial for first-time buyers. With the help of a knowledgeable and qualified mortgage advisor, the dream of homeownership becomes more attainable when approached with careful consideration and awareness. If you are considering buying your first home in 2024, then please feel free to give our team of advisors a call today. We are happy to help.

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