In a time where taking that first step onto the property ladder may seem harder than ever, recent research has highlighted that the financial benefits for homeowners still remain for those that are fortunate enough to break the rental cycle.
Private renters could expect to pay an average of £451,600 over the next 30 years, taking into account a 2% increase in rent per year. Compare this to a homeowner with a 25-year repayment mortgage, who would pay £317,900 if interest rates remain at current levels, according to the Intermediary Mortgage Lenders Association.
This means that over a 30-year period a homeowner would pay a staggering £133,700 less than a private renter, and when adding the accumulation of equity that could have built up in the properties, the average homeowner could be a massive £352,000 better off than if they were to rent the average privately rented property.
Despite being able to save a lot of money in the long run, raising a deposit is still the biggest hurdle to becoming a homeowner and breaking the rental cycle.
House prices, and therefore the size of the deposits that are needed, have increased in recent years making it harder for people to be able to benefit from owning a home.
However, there are plenty of options available for those who are seeking to purchase their dream home. These include (but are not limited to) high loan to value mortgages and the Help to Buy equity loan scheme, which can allow borrowers to become homeowners with as little as a 5 per cent deposit.
There are also a number of products available from a range of different mortgage lenders that allow family members to help their loved ones onto the property ladder.
These products can range from adding family members names to the mortgage to essentially increase income and affordability or using a portion of the value of a family member’s home for security to help raise a deposit. There are also mortgage products available with 40-year terms which allow borrowers on lower incomes to stretch their payments over a longer period.
There are a number of other options for renters looking to become homeowners, but it does highlight why seeking professional advice can be invaluable. With a whole host of options, we will be able to find the product that’s right for your individual personal circumstances.
If you or your loved ones want to become a homeowner, contact us today.