By Sarah Macklin 
The property market experienced a boom almost like no other thanks to COVID-19. House prices shot up with the temporary stamp duty holiday, but it doesn’t look like house prices will be returning to normal any time soon.
This isn’t necessarily good news for first-time buyers who are looking at purchasing their first home. Increased house prices means larger deposits are required, or it means that their budget will go down and they’ll have to look at smaller properties in other areas. But is this the only thing first-time buyers have to worry about? According to money.co.uk, not necessarily.
The mortgage experts at money.co.uk took the time to survey over 1,500 first-time buyers to find out what their top fears are when buying their first home, and we’ve listed the results below.
1. House value drop/negative equity
The number one fear for first-time buyers was that the property they’ve just bought would drop in value, only to be left with negative equity in a house. Of the respondents, 31% said that would be worried about their property becoming less valuable than the remaining value of the mortgage.
So when buying a house, what advice is there for avoiding negative equity or overpaying on a property?
Nisha Vaidya, mortgage editor at money.co.uk, said:
“There are a few things you should keep in mind if you want to avoid negative equity. Firstly, it’s important to make sure you pay the market value for the property, so don’t shy away from negotiating on the asking price.
“Secondly, the larger your deposit, the more equity you will have in the property. So, if you are able to save enough, putting down a bigger deposit is a good idea.”
Putting down a bigger deposit would be a great way to solve the problem, as this usually results in lower interest rates. But this isn’t always possible, and first-time buyers are concerned that they can’t save money at the same rate as house prices are increasing.
2. Matching a deposit with rising house prices
This brings us onto the second biggest fear – saving enough of a deposit – with 26% surveyed agreeing this was an issue.
Nisha Vaidya has put together a few top tips to increase deposit savings. These include:
- Setting a budget – it’s important that first-time buyers have a budget for their house so they know how much to save. Do take into account solicitors and conveyancing fees too.
- Cut rent costs – rent is one of the biggest outgoings for people who don’t yet own their home, and so by reducing this, they’ll likely be able to save a lot more money. They might consider moving in with parents or to a house share temporarily.
- Get a lodger – if they live alone, a great way to bring in extra rent is through a lodger. They must check their landlord is happy with this and can start subletting a room.
3. Being able to afford the mortgage
The survey revealed that 22% of respondents were worried about being able to afford their mortgage long-term. What if something happens and they lost their job or couldn’t work any more? Unfortunately, these things can happen at any time, but there are usually grants and government subsidies that could help during these times. Nisha Vaidya says:
“If first-time buyers are worried about affording their mortgage, there are ways a buyer can get support. This type of support can include: a payment deferral, an extension to the mortgage term and a change to the mortgage type.”
4. Spiked prices due to COVID
As we’ve already mentioned, house prices have gone up due to COVID, and this worried 13% of the survey’s respondents. But it is worth mentioning that, with the stamp duty holiday cut, first-time buyers could still potentially save money or get the property for the price they wanted. It’s also worth noting that house prices will likely come back down, and so they could choose to hold off buying and see what happens to the market. This gives more time to save a decent deposit.
5. Breaking up with a partner
This is the first ‘fear’ that doesn’t involve finances. Buying a house is expensive but many first-time buyers (11%) were also concerned about breaking up with a partner they’ve just moved in with.
Nowadays, it’s common to live together first before getting married, while in the past it was always the other way around. In fact, it might have been frowned upon to live together as an unmarried couple.
But what if two buyers decide that living together just isn’t working? It’s common to sell up, pay off the mortgage and then split the remaining money 50-50 between the two people. Sometimes, depending on whose name the mortgage is in, one person may choose to stay in the house while the other moves out. Either way, the situation can be dealt with.
Getting on the property ladder can be nerve-wracking, but it can also be exciting. First-time buyers should put all of these fears behind them and do their best to save up to buy their first home.
