First time buyer mortgages: how to buck the trend
The number of those getting onto the property ladder aged over 40 has shot up in the last year, according to a new report. But it doesn't come without consequences. Here's what you need to know and how to buck the trend...
February 13, 2020
First time buyer mortgage at 37 now the norm
Official figures show the average age of first time buyers in England has risen from 31 to 33 years old over the past decade. But in some parts of the country it’s significantly higher; the average age of getting onto the property ladder in London is 37 years old, according to the Daily Telegraph.
And the number of ‘older’ first time buyers has risen sharply in the last year too. Figures compiled for Telegraph Money by Skipton Building Society show between 2018 and 2019, there was a 14% increase in first time buyers aged over 40.
What does this mean for getting a mortgage?
There are a number of implications if you buy your first home at a later age. And a major consideration is the impact it has on the mortgage options open to you.
Most banks have upper age limits by which point you’ll need to have paid it off. This is often 70 to 75 years old. So if you leave it too long before taking out a mortgage, you may discover you’ll need to take it out for a shorter term. This will make monthly repayments more expensive.
It’s also vital to think carefully about how long you want to have a mortgage for too. You may be looking at working full time to pay off your mortgage well into your seventies.
Affordability is also going to become an issue if you wait until after you have children before buying your first home. Lenders take commitments like childcare costs into account when they do affordability tests. So your borrowing power may be reduced.
Another factor to consider with first time buyer mortgages in later life is that you may be paying it off at a time when you had hoped to be enjoying your retirement or helping your children to buy a home themselves.
How to buck the trend – and become a homeowner sooner
One common mistake many people make is assuming they can’t afford to buy a home. Until you’ve researched and spoken to mortgage brokers and investigated the range of schemes available you shouldn’t rule it out.
In fact, there has been a recent boom in the number of mortgages available for people with just a 5% deposit, according to Moneyfacts, with now 405 95% LTV mortgages on the market. So it’s a good time to be shopping for first time buyer mortgages.
This coupled with government schemes like the Help to Buy Equity Loan scheme, which lets you but a home with just a 5% deposit, is another helping hand on the housing ladder.
So instead of delaying, find out what’s available to you and how much you can afford. Our partners at L&C will give you fee-free advice about your mortgages options.