Your first home is not necessarily your dream home, lender advises
Mortgage Introducer’s Desmond Devoy, hears from Lucy Lewis, of Skipton Building Society, on first-time home buyers’ worries, identified by its own study.
This article was produced in association with Skipton Building Society
Research from one of Britain’s largest building societies, Skipton, has shed new light on the concerns of first-time buyers.
Buying a home for the first time has always been a daunting experience for many, arguably even more so now than ever before for those struggling with affordability in today’s cost-of-living crisis.
But Skipton is working hard to help first-time buyers, who make up more than a quarter of its borrowers. That number has been rising year on year since 2015, when they accounted for 16% of the building society’s customers.
Lucy Lewis (pictured), Skipton’s national account lead, referenced that the first-time buyers she has spoken with wished they had taken professional advice sooner, rather than rushing into their first property purchases.
“I’ve had a lot of people say, ‘We should have spoken to a mortgage broker to start off with. We should have worked out exactly what we could borrow’,” Lewis shared.
First-time buyers can be influenced by well-intentioned family and friends too, she said, for example, when talking about purchasing their first property with their mates down the pub, or over a Sunday roast with mum and dad. While those in their immediate circle may be good for moral support, they quite possibly bought their first homes at a different time, under different rules, which – as Lewis suggests – underlines the need to talk to a professional expert in the current mortgage market.
A broker arguably knows pretty much everything there is to know about the financial side of buying a home. “It’s a good place to start,” Lewis offered. “The market and the options available have changed massively, so you need up-to-date advice.”
Skipton’s first-time buyer research
Skipton Building Society’s knowledge base, though, goes beyond the anecdotal. As Skipton Group recently commissioned a survey of a thousand adults who were looking to buy their first home within the next three years, seven out of 10 of them were willing to compromise on something to get on to the property ladder – 42% of respondents were happy to have a smaller garden if it meant that they could buy a home, while 37% were OK with being further away from where they ideally wanted to be located. And 67% accepted that their first home would be smaller than their ideal property.
Lewis said it was important for first-time buyers to realise that buying a home was not a once-and-done proposition.
“Your first home is not necessarily your dream home,” she considered. “It’s the first step on that ladder – it’s not necessarily your forever home. It’s a place to start on your home-buying journey.” Part of this comes from the equity that a homeowner builds up in their first home, to get to something that more closely aligns with their dream home.
Skipton launched the first of its kind Track Record mortgage in May of last year, aimed at people who have felt stuck, living in rental properties. Paying rent can make it difficult to save for a deposit, of course, and according to its research, it takes people 7.9 years, on average, to save a deposit for a house – and even longer if they live in London.
They may not be buying their dream three-bedroom detached property as their first home, but, by compromising, a more modest house will still get them on to the property ladder, no longer paying rent, and building equity in a home, rather than paying for someone else’s mortgage.
Lewis also pointed to initiatives, such as Shared Ownership and Income Booster mortgages, on which brokers can expertly advise their clients. Highlighting what’s available to first-time buyers can really benefit brokers, she explained, by illustrating their knowledge of the market. They have an important role to play, too, in demystifying mortgage jargon, which can be overwhelming for those who haven’t bought a property before.
Skipton’s survey showed that 40% of those questioned were confused by terms such as ‘stamp duty’ and ‘negative equity conveyancing’. Around 60% of respondents admitted they worried that their lack of understanding was slowing down the process.
“This is where the broker can massively help because they can make sure that the buyer understands what they’re talking about.” Lewis enthused. “They can go through all of the documentation and make sure a homebuyer knows what’s going on.”
Fifty-two per cent (52%) of respondents, surveyed by Skipton, worried that they might be missing out on a better deal because they did not understand what was available to them – providing another opportunity for brokers to step up to help their clients in the right direction.
The vital role of brokers
Lewis emphasised that mortgage brokers are key to the house-buying process.
“They play a vital role in holding people’s hands, talking them through the process,” she said, “identifying how advisers liaise with solicitors and lenders on their behalf – wisely assuring prospective borrowers that there will be periods when everything seems to go quiet, even though things are progressing behind the scenes. Brokers are also crucial to ensuring that first-time buyers understand the importance of protection.”
If the goal of a building society is to get people into homes, 2023 was a great year, Lewis reflected. Confidence is high that innovative thinking and customer research will ensure another strong 12 months of business for Skipton Building Society.
“First-time buyers are so important.” Lewis concluded. “In the housing market as a whole, you need the people buying for the first time for other people to be able to sell their home and move on up – it’s fundamental.”
