Why Is It So Hard To Get On The Property Ladder?

Real estate agent with a couple

So many real estate agents say that getting on the property ladder now is harder than it has ever been. If you are currently renting a property and you are looking to get onto the property ladder, it’s important to be aware of the biggest obstacles.

So why is it so hard to get on the property ladder? Here are 4 of the most common reasons:

1. The Size of the Deposit

A standard first-time buyer will need at least 10% to meet mortgage approval. In these uncertain times, many mortgage lenders are asking for even more. And while you may think that you have enough for a 5% deposit, you’ve got to remember that this will result in higher interest rates which increases your monthly repayments.  

The total costs can really mount up once you add the deposit to the associated costs involved in buying a house.

There are types of mortgages designed for first-time buyers which are designed to combat the deposit barrier. It’s important to remember that right now, because of the instability of the market, you may have to wait for society to open back up fully to take advantage of these.

2. The Stressful Mortgage Application

The lending criteria became more stringent in light of the financial crisis in 2008. And this “stress test mortgage” process means that a lot more people are struggling to secure a mortgage, even if they would have sailed past the process pre-2008. Many people struggle to secure a mortgage for this very reason.

However, lenders have been relaxing the rules and there are many specialist lenders on the market. In these instances, this is where a mortgage broker can give you invaluable insight. When choosing a broker, it’s important to go for a “whole of market” one as they will have access to, as the expression suggests, the entire market.

3. Being Trapped Paying Rent

Another obstacle to getting a mortgage is trying to save for a deposit while you are paying rent. Rents have shot up massively since the pandemic, and as mortgage payments tend to be cheaper than rent, it may mean that people renting properties find it difficult to make that transition. Therefore, many people find themselves trapped.

One of the solutions, much like previous generations, is to make the move back to the parents or the in-laws in the short term, so you can get a true idea of what you want. The next step is to figure out whether you want to rent or buy a house.

4. Gazumping

This is something that has been rife in the midst of the pandemic. Gazumping is the term when an offer has been made on a property but somebody else makes a sneaky higher offer which the seller then accepts. Unfortunately, it has been commonplace recently but this is where home buyer’s insurance can help cover you. If you have found yourself the victim of gazumping, you may wonder when will home buyers insurance pay out? But the process depends on a number of components. Needless to say, gazumping is not just a major obstacle but it is one of the most frustrating aspects when you are so close to the line.

There are a number of reasons why it is hard to get onto the property ladder, and these are undoubtedly some of the biggest. Many people will tell you it’s harder than ever to get onto the property ladder, but this is why you need to go in with your eyes open and have all the information at your fingertips.

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