What is the Property Ladder?
The property ladder in the United Kingdom is a term traditionally used to describe the process of buying and selling property to make a profit. It involves the gradual acquisition of property at ever-increasing property prices.Starting property purchases usually begin with first-time buyers, who purchase residential property typically with the intention of living there. As their disposable incomes increase or the property value increases due to house price inflation, they may decide to invest in a larger property.
Traditionally, a first-time buyer would first buy a flat, then move on to a 2-3 bedroom home and eventually buy a larger, semi-detached or detached family home with 3-5 bedrooms. It is essentially a process of buying and selling residential properties over time in order to move into a larger home or a better area to live in.
Location Matters...Buying the Best House Doesn't
When searching for properties to purchase in the UK, location matters.The purchase price of a property certainly has an impact on how attractive it can appear, but it's not the only factor to consider.
In today's highly competitive UK property market, average house prices can vary significantly by neighbourhood and town, making it difficult for buyers to identify the perfect property within their budget.
For this reason, it is often better to purchase the ‘worst house on the best street’ where possible; although more costly than an equivalent poor-quality house in a less desirable area, this type of purchase can offer superior long-term resale value due to strong demand from buyers keen to live in that sought-after locality.
Don't Be Scared of Renovating
For those looking to ascend the UK’s housing ladder, renovating a property prior to sale is an effective solution. Not only can modernising a home and freshening up decor increase sale price significantly (giving sellers more leverage when negotiating on more expensive properties) but it also helps their property to stand out amongst the competition.Property experts have long understood that successful renovations can lead to higher sale prices, so making use of budget-friendly DIY renovations, such as painting and replacing fixtures and fittings, could prove a great return on investment for homeowners looking to tackle the housing ladder.
Make Short-Term Sacrifices to Reach your Long Term Goals
Purchasing a home in the UK is no easy feat and it can be discouraging to think about the average deposit you'll need to put down on a home. But for those with long-term goals of climbing up the property ladder, making short-term sacrifices now through careful budgeting and putting in the effort to do renovations yourself can yield big rewards later when house price growth is taken into account.Even if that means spending lots of late nights at home giving your property an upgrade, learning how to take on projects yourself or setting aside funds for a larger deposit. By doing this, it will give you much more house purchase options in the future along with other benefits. If you are willing to put in the extra effort, you may be able to create more capital which could mean access to better mortgage deals or buying your dream home.
Although it won't be easy, by spending your time on renovations and controlling your expenses; you will be taking a great step towards achieving your property goals.
Keep on Top of your Finances
Having a good credit score is essential in making sure you get the best mortgage deals when looking to purchase a house in the UK. It is one of the first things that mortgage lenders assess, so it is important to make sure that your credit score is up to scratch.Building credit can be done by using credit cards or loans responsibly and little by little. Avoid taking out any kind of payday loan, as this could potentially bring down your credit score significantly. Furthermore, make sure to stay up to date with payments and register on the electoral roll.
Lastly, if it has been some time since you've used credit it's useful to consult with a mortgage advisor before going ahead with anything as they can help understand where you stand credit-wise before starting the process of applying for a mortgage.
Think About Future Costs
When deciding to upsize your current home and relocate to a larger one in the UK, there are various costs to bear in mind. Prices in the UK housing market have been unpredictable and stamp duty costs (taxes paid when buying a property) can range from nothing to thousands depending on where you're located. If you are wondering how much stamp duty you will have to pay, take a look at our handy guide.Additionally, it's important to factor in solicitor fees for contracts and surveys, any additional moving costs incurred, and your monthly bills at the new residence such as council tax. Moving home is no small decision and should be carefully thought out before taking the plunge - ensuring that all potential costs are taken into account will help to realise a smoother transition.
Key Takeaways
- Buy the worst house in the best location that you can afford, you can always change and update the house that you live in, but you cannot change the area.
- Buying a home that is in need of renovations can be a more affordable way to create the house of your dreams, and to increase it's value.
- By investing time and budgeting your money for a short-term period can help you to achieve long-term goals and help you buy the property that you love.
- It is crucial to keep on top of your credit, regularly check your credit score and ensure that you are on the electoral roll to have access to the best mortgage deals on the market.
- Keep in mind the costs of buying a new home, and moving from your current one. You may have large stamp duty bills to pay and high moving costs, so it is best to prepare for these if you are considering getting on to the property ladder, or climbing it.