Top tips to help renters get on the property ladder

Posted on Monday, October 3, 2022

With the latest figures revealing that, on average, it takes Brits between 5-9 years of renting before they can afford to buy their first home, Ben Osgood, Money Expert at Beehive Money, shares his insight into steps you can take to make this easier.

The study conducted by Beehive Money found that 35% of Generation Zs said that they had to rent for 1-2 years to save for their first home, while another 35% said that they did not need to rent. 28% of 20–34-year-olds live with their parents; this is up from 25% in 2012. Many renters are now worrying they will never get onto the property ladder, due to the cost-of-living crisis.

Working out your budget

Renting and trying to save for your first home can seem impossible and attempting to do both at once can leave people feeling frustrated. But with some careful planning and budgeting, buying your dream home may be closer than you think.

Ben explains: “When buying your first home there are a number of costs that you need to consider when working out your budget. Such as your deposit, mortgage, stamp duty, surveyor fees and conveyancing fees. This is something that your mortgage adviser can help you with but bear these in mind when starting your first home journey.

“When reviewing your monthly outgoings, it’s a good time to work out what’s essential, like rent, bills, food and fuel, and those that aren’t. There are a number of savvy ways to help you reduce your monthly outgoings, from analysing your non-essential outgoings like takeaways, clothing and nights out, to utilising tools such as Beehive Money’s Budget Planner which is a great tool to help you budget for those future goals and is easily accessible.”

Start using your rental payments to help build your credit score

Your credit score is a key component that mortgage lenders will take into consideration when you apply for a mortgage. Doing things like ensuring you’re on the electoral register and paying your bills on time are much spoken about in terms of improving your score.

Ben says: “Something many renters aren’t aware of is that as long as they pay on time their rental payments can actually help build their credit score. Through Beehive Money Marketplace, we connect our customers with a service that improves their credit position with all four main Credit Reference Agencies, and also improves their credit score with two of them - Equifax and TransUnion. Signing up to CreditLadder via Marketplace means your rent payments can be reported to Experian, Equifax, TransUnion and Crediva.”

Saving for your deposit

Before looking at properties on the market, you need to save for the deposit you are going to put down. Treat saving for your deposit like paying a bill, and put it away into a savings account each month so that you are not tempted to touch it. You will soon see the amount add up.

Ben explains: “Buying your first house is one of the most exciting things you will experience, and the first thing you need to do is to save for a deposit. The thought of saving for a house deposit can often leave people feeling a little helpless, but for first-time buyers our Lifetime ISA lets you save up to £4,000 per tax year - plus they can receive up to £1,000 each year from the Government in bonuses as well as annual interest.”

Finding the best mortgage deal

There is a whole host of mortgage advice and deals available on the market, so it is time to explore what type of mortgage best suits you. The amount you can spend on a property is determined by your salary, so bear this in mind before searching for your dream home.

Ben says: “When starting your initial mortgage research, you need to be able to answer the following questions:

The value of the house you want to buy

How much you have saved

How long you want the mortgage term to be

How much you earn

Your other monthly outgoings

“These questions enable you to be realistic about what you can afford. Buying a property is one of the biggest financial commitments you can make, so being fully aware about what you can afford is a must.”

Speaking to a mortgage adviser

So, you’ve done your research, worked out what you can afford, and you have saved your deposit- now it is time to speak to a mortgage adviser. They will look into your income and spending and will help you confirm your budget and what you can borrow.

Ben explains: “Buying your first home can be a stressful time so it’s worth considering whether a mortgage adviser who can take away the stress of finding a mortgage. Your mortgage adviser will compare the best mortgage deals out there and find the right one for you.

“Finding a mortgage adviser is simple and easy. Friends may recommend ones they have used previously, or you may find one online that suits your needs perfectly. With their expert knowledge and experience, your mortgage adviser will deal with the lender directly on your behalf, which will save you a lot of time.”

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