As the average price for a starter home increases, more young first time buyers are struggling to borrow enough money without doubling their salary, according to a recent analysis.
Data provided by the Office for National Statistics indicates that the cost of a starter home rose in May this year by 5.1% to £211,000. If a 17% deposit was paid, the borrower would still have to find £175,000 for the mortgage. As most lenders will consider a maximum of 4.5 times the salary of the borrower, the buyer would have to be earning a salary of £38,917 per annum, according to data released by ‘Which?’
HM Revenue & Customs has provided information which gives the average salary for a person aged 20 to 24 years as £16,400, leaving them far short of being able to buy their first home. Some lenders will consider providing a mortgage for those who only have a small deposit, but the interest rate is generally higher.
Figures released by the Halifax show that the average age for buying a first home has risen from 28 to 31 years old. Although loans are available for those with small deposits, the new stricter lending rules have made it much harder for borrowers.
Mortgage advisers have to be prepared with all the latest information, so that they can help people to buy a home which they can afford. A CeMAP training course will help to prepare advisers for the challenge.