Six years shaved off age of first time buyers
A government initiative aimed at getting first-time buyers on the property ladder has shaved six years off the age at which people can afford their first home.
According to analysis of official data by the Mortgage Advice Bureau, the average age of people who bought a home in the last year through the “Help to Buy 2” mortgage guarantee was 31, compared with the national average of 37.
More than 70,000 people have bought their first home over the past year using Help to Buy, which allows savers to buy a home with a deposit as low as 5 percent.
The average salary of home buyers using the Help to Buy mortgage guarantee fell by 12pc over the past year from £31,270 to £27,957.
This is contrast to the trend in the wider market, where the average salary of borrowers increased marginally from £39,834 in September.
For someone buying the average home worth £231,487 with a 5 percent deposit using Help to Buy 2 over a 35 year repayment term, the cost would be £409,100, according to Mortgage Advice Bureau data.
This compares with £370,934 for someone with a 25 percent down payment over the same period. By reducing the repayment period by 10 years and accepting higher monthly repayments, the total cost of buying the house under Help to Buy 2 (with a 5 percent deposit) could be reduced by more than £50,000 to £349,361.
Mortgage Advice Bureau said “by allowing borrowers on lower salaries to buy a home with a deposit as low as 5 percent, it’s no wonder the age of borrowers has fallen. If you go back a few years, people were having to find at least 10 percent or 15 percent, which can take young people years to save.”
For this reason, Help to Buy 2 could be particularly good for people who don’t have parental help but are keen to get on the property ladder.
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