Thinking outside the box when buying a house

Apr 17

Thinking outside the box when buying a house

There is more than one way to secure a property in your name…

Buying a house just isn’t as simple or as easy as it used to be. With house prices constantly rising, many young people are left trying to come to terms with the idea of never becoming a homeowner, earning them the nickname ‘Generation Rent’.

The average house price in the UK is around £216,000, and in London it gets close to half a million. Over the next few years, the average house price is expected to rise to around £270,000. What’s more, in 2016 housing charity Shelter reported that by 2020 first0time buyers will need a household income of at least £64,000, along with a £46,000 deposit, just to buy an average home in a desirable location.

Because of all this, many first-time buyers are finding new and unique ways to get on the housing ladder. From buying with their friends to using bridging loans for house purchase, these are just some of the ways people are thinking outside the box when it comes to securing their first home.

Auction wins

Auctions are very different to the traditional property market. This fast-paced environment gives you access to properties which would otherwise pass you by. These might be old homes, potential projects or even homes with are essentially derelict and in need of some major TLC. However, there are endless hidden gems to be found at auction, so if you have a deposit it can be a great alternative to more typical buying methods. In order to secure a deposit, bridging finance can be very useful (more on that later).

Make sure you don’t get too excited by the guide prices though. These tend to be extremely low, but bidding will raise the price so be sure to have a firm maximum which you know you can afford. You don’t want to get caught in a bidding war.

Buying with friends

It makes sense that, unable to afford a home on their own, more and more first-time buyers are choosing to invest in a property with a sibling, partner or friend. By pooling two incomes and two lots of savings together, you’re much more likely to be able to afford a worthwhile property in your desired area.

Of course, there are risks involved. Relationships can break up, friends can fall out and things can turn sour, but if you choose the right person, and are completely honest about your intentions from the outset, there’s no reason why this can’t work.

Buying with parents

Similarly, other people are asking their parents to help them with their purchase. The Bank of Mum and Dad is surely one of the most popular mortgage lenders in the country, and now – thanks to the popularity of the guarantor mortgage – parents are helping their adult children more and more when it comes to homebuying. In this situation, your parents may wish to act as guarantors, using their own assets as a security for your home purchase. Again it can be risky, but it can provide you with more opportunity and choice.

Bridging loans for house purchase

The frustrating thing for many current renters is that they know that monthly mortgage payments are often more affordable than rent costs. However, it’s the deposit that they can’t afford. For this, you need access to a significant amount of funding quickly, and that’s exactly what bridging loans can provide. This is short-term finance which can help you bridge a gap in your funds or take advantage of an opportunity. Once you’ve secured your new home using your bridging loan, you can pay it back in instalments. Bridging loans are designed to give you fast flexibility and freedom on the property market, so it’s definitely something to consider.