My partner and I have been dreaming of buying our first house for what seems like an age now. Every time I knuckle down with our savings, something big on the financial scale always pops up; for example, having a second child and deciding to get married! Yes, these are financial ties that we have set ourselves up for, however it feels like now that our family has grown, we’ve adopted a dog, and we’re all set to get married in November, it’s a good time for us to start getting serious about buying our first house.
I thought I’d share my tips on how to go about getting onto the property market in 2021, especially as a young family. I’m also self-employed, so if you’re in the same boat as me and you’re wondering what the future of housing holds for you, give this post a read!
Invaluable Housing Market Resources.
First things first – do your research! Considering purchasing your first house can feel so overwhelming, which is why I am so grateful to have found the Mortgage Calculator website. The Mortgage Calculator website is absolutely invaluable for anyone dealing with the property market. There are several practical calculators that can give peace of mind, including loan overpayment and remortgage calculators.
They also provide additional resources that just make absorbing all that information so much easier. These include graphs and tables that I haven’t seen anywhere else.
What you need to know about the UK housing market in 2021.
Buying a house isn’t a decision to be taken lightly, after all, it’s a lot of money! There are so many things to consider, from housing prices to location, even to the stability of our employment. That’s all before we even start to consider the effect that COVID 19 has had on housing prices across the country during 2020 and 2021.
The COVID 19 pandemic has significantly affected the UK housing market.
It was inevitable that a surge in cases and national lockdowns would affect the economy, and, of course, the housing market was bound to become greatly affected. The good news is that Boris Johnson announced a 5% mortgage deposit for first time owners back in October 2020, which allows first time buyers more access to various mortgage products and makes saving for a first home significantly easier for those who cannot afford the old 10% mortgage deposit.
On the flip side, many banks have tightened their lending standards, due to the unfortunate rise in unemployment that Coronavirus brought about. This, coupled with the record breaking backlog of housing sales between lockdowns, pushed the average asking price up by 4.6%.
The result of all these changes? Although it may be easier to save up enough money to be eligible for a mortgage, you may find that actually getting approved for one becomes a bit of a challenge, especially as a young first time buyer.
Baseline limits & information for self-employed individuals.
Typically, mortgage lenders will not lend more than 4.5 times the borrowers annual income. So, as an example, an annual income of £50,000, a lender may be willing to grant your £150,00+. For joint applications, the grant is usually lower, so that’s definitely something to bear in mind. Honestly, it can all get a bit complex, so my advice is to use an online calculator that estimates the mortgage affordability based on your income.
My partner works full time and has a steady income, which is obviously a great aspect to have on our side when it comes to getting a mortgage. On the other hand, as a self-employed freelancer, things are a little more complex for me.
Can you get a mortgage when you’re self-employed?
Getting approved for a mortgage as a self-employed individual is certainly more difficult as you are required to thoroughly prove your income is sufficient. That being said, it is certainly not impossible
I have been doing a lot of research on this topic as it is a big factor that will affect us when it comes to approaching banks. A resource that I have personally found useful is the Self Employed Mortgage Guide by Money Supermarket which discusses the type of information you’ll need to provide and how to boost your chances as a self-employed worker.
When will we get our first home?
It looks as though young first time buyers, like my partner and I, may have a bit of an uphill struggle when it comes to purchasing our first property. There are government schemes available to help with affordable home ownership which could be something we take a closer look at as our savings grow. For now, especially as I am self-employed, I think we will stick to saving up as much money to put towards a deposit as is possible, and see what happens in regards to the housing market in the next few years.