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What Does It Take for First-Time Buyers to Earn an Extra Income to Step onto the Property Ladder?

Zoom Local News > Business > What Does It Take for First-Time Buyers to Earn an Extra Income to Step onto the Property Ladder?

What Does It Take for First-Time Buyers to Earn an Extra Income to Step onto the Property Ladder?

Buying a property in the current dynamic UK housing market can be rather challenging. With the rising rate of mortgages, the increased rate of interest, the high rate of inflation and the rapidly rising cost of living, saving for a deposit can be quite tough. To top it off, finding an affordable home with an affordable mortgage can be quite a task! So, what does it take for first-time buyers to earn some extra income to be able to step onto the property ladder? This is what the estate agents in Selby have to say.

According to data recently published by Zoopla, first-time buyers in the UK need to earn around £7,500 more than they did in 2020 to buy a property in 2023. Essentially, this means that first-time buyers will need a household income of £55,900 to buy a three-bedroom house in the UK. For first-time buyers looking to buy a two-bedroom house in the UK, they will need a combined household income of £51,000, which is around £4,900 more than what they needed in 2020. While this is the statistical UK average, first-time buyers will need a whopping £12,000 more to buy a three-bedroom house in London or South East England. With that being said, according to the Office for National Statistics, average wages in the UK have only risen by £4,800 in the past 3 years. However, the average amount that buyers need to put down as a deposit has risen in the same time period! 

In 2022, first-time buyers will need to put down a deposit of around £34,500 for a property costing £230,000 on average, which is a £5,000 increase from 2020. For a two-bedroom house costing £210,000 on average, buyers would need to put down a deposit of £31,500 which is a £3,000 increase in the last 3 years. According to market experts, most first-time buyers prefer to buy a three-bedroom house but since the prices have risen dramatically many first-time buyers are choosing to buy one-bedroom or two-bedroom apartments instead! So, what will it take for first-time buyers to secure extra income to climb onto the property ladder?

Think about job stability

If a promotion or a new job is on the cards, then it is better to wait for that to happen before applying for a mortgage. A higher annual income means a chance to secure a higher mortgage; this will allow first-time buyers to be able to look at bigger and better homes that fit into their budget as opposed to looking at smaller homes or apartments. 

Money saved is money earned

Consider cutting down on your expenditure to save money; after all, money saved is money earned. Banks and mortgage lenders will usually ask for bank statements to figure out your monthly expenditure so it is a good idea to reduce your monthly expenses to be able to save some extra money. Simple things like making coffee at home, eating home-cooked meals and curbing your shopping budget can help you save money.

Start a side business

A side business or a freelancing opportunity can help you earn some extra money, and probably more than enough to cover the cost of your new home. You can look into business opportunities like becoming an online tutor, taking surveys for cash, hosting on Airbnb, working as a social media manager or joining an affiliate marketing program. Essentially, you want to find ways to create passive income streams to be able to add to your new home fund.

Set a budget

The best way to climb onto the property ladder without spending more than you can afford is by setting a realistic budget. Sit down with your financial statements and figure out how much you can afford to spend on your new home, keeping in mind additional costs such as stamp duty, estate agent fees, council taxes, repairs and renovations and so on. Once you have a budget in mind, you need to start working towards saving money for the deposit while ensuring that you have enough money to pay the monthly mortgage and interest. 

Research active government schemes

There are various government schemes in the UK such as the shared ownership scheme and the Help to Buy scheme as well as various developer’s incentives for first-time buyers. Do your due research and figure out which schemes can help you climb onto the property ladder.