Homeownership in your mid-20s is no idle pipedream. Despite a sometimes bleak forecast and the fact that first-time buyers have undoubtedly been hit hard by the impact of COVID-19, owning a home by 25 can be a reality. There are many benefits of buying a house in your 20s – and with property prices stalling in London and the Government’s current Stamp Duty relief, now could be an ideal time to get on the capital’s property ladder.
Buying a home is a huge financial commitment, whatever age you are. You’ll have to be confident that you can make your monthly mortgage payments and other bills on time, every month. Of course, if you’re buying a home in your 20s, your salary might not be where you’d like it to be, especially if you’re only just starting out in your chosen field – but you shouldn’t let this hold you back. There are many affordable properties in London, as well as schemes like Help to Buy that can help you get on the ladder. If you’re on a lower salary, you may want to buy with someone else to increase the options you can afford. Remember that getting a mortgage together will financially link you, so their credit history will impact yours in the future.
Advantages of owning a home in your 20s
From mortgage rates to Government saving schemes, there are many benefits of buying a house in your 20s.
-
Longer mortgage terms
Because you’re in your 20s, you’ll have the option to select a longer mortgage term than most. This will make your monthly payments smaller and more affordable. -
First-time buyer support
If you’re buying your first home, there are several Government schemes that can reduce the deposit you’ll need, helping you to become a homeowner sooner. -
Up and coming areas
When buying a home in your 20s, you’re less likely to have commitments or health implications that affect where you need to live. For example, being close to a good school, childcare, or easy-access transport may not be a priority for you at this stage of life.
This means that you could buy more strategically for a long-term profit – searching in areas where property values are expected to rise.
One of the great things about buying in London is that it will always be a popular place to live. If you do buy and decide that being a homeowner doesn’t suit you, or you want to move elsewhere, you can always put your home on the market. With London properties in short supply, you shouldn’t have a problem selling your home in the future.
How to own a home by 25
The above might not paint the best picture for those hoping to get their foot on the ladder. You might well be asking ‘how am I supposed to buy a house?
However, buying at the age of 25 can be done, here’s some advice:
-
Start saving
Save, save and then save a little bit more – it may sound like fairly obvious advice, but there is really no way around the hard work of saving (unless you are lucky enough to win the lottery, of course).
Crucially, putting your every effort into saving means foregoing those everyday little luxuries – which might not seem to cost so very much at the time, but add up as the days, weeks, and months go by.
Need help navigating this journey? Download a home buyers’ toolkit to guide you through the process step by step.
-
Budget
Budgeting means knowing where every penny of your income goes – it might mean a slight lifestyle switch. This means opting for the supermarket’s own branded goods and cutting back on takeaway coffees, for example. These small changes soon add up.
But, knowing where your money is going is a certain spur to making the savings you need.
Other sacrifices, such as holidays, clothes, expensive trainers, may well need to be made too.
-
Have a figure in mind
How much you manage to save depends on your income (or incomes), and how much you can realistically afford to set aside each month. Suppose you’re looking to buy in three years’ time and need to save £20,000, that’s around £417 you need to save each month.
Set yourself a long-term goal to work towards.
-
See where you stand
It helps to get prepared in advance. A mortgage lender will look at your credit report, so check your credit score now. If it’s poor, you’ve got time to improve it. Some tips include:
-
Pay your bills on time
-
Pay off existing debts
-
Pay off any credit card bills every month
-
Check for any fraud
It may be no coincidence that more of the reported success stories come from couples rather than single people.
With the advantage of two incomes, of course, you are not only able to save more, but may also demonstrate a higher combined income to any mortgage lender.
While there are some affordable places for buying a house alone, including Bradford and Derby, it will be harder.
-
Ask the professionals
Talk to an independent financial adviser or a mortgage adviser, for example, for help in managing your finances and putting yourself in a favorable position with potential lenders.
Not all professional help comes free, though, so remember to include in your budget the cost of solicitor and surveyor fees.
-
Help is available
Don’t forget the government has offered payment assistance for home purchases.
This includes the Help to Buy Equity Loan scheme which allows you to purchase a new build property with a deposit as low as 5%. It’s been helpful to many who have bought a house.
There’s also news that the impact of the pandemic on first-time buyers hasn’t gone unnoticed, with Boris Johnson vowing to turn ‘Generation Rent’ into ‘Generation Buy’, in the form of a 95% mortgage guarantee scheme announced in the spring Budget. This is designed to help those with a small deposit get on the ladder.
Fortress Homes will help explain how to go about buying your first home and some things to consider. If you’re ready to start your search, check out our website for the available new-build homes in London.
Get in touch with our expert local agents for more questions! 02074821150
