It's too expensive
“ALL I’VE JUST LEARNT IS THAT I DON’T HAVE ENOUGH MONEY”
This is the most common challenge that follows for many buyers after having worked out what they can afford to borrow.
If the thought of saving for the next 20 years to get enough to be able to afford the property you want doesn’t appeal to you then there are still some other options available to you.
Ever wondered why so many people end up living further out/away from work than you’ve considered?
It may be because when they went to buy they couldn’t afford what they wanted in the area that would have been the most convenient.
If you find yourself in this situation, you either need to change the criteria of the property you’re looking for (usually meaning it needs to be smaller) or where you’re looking. The latter option is a good one as often it doesn’t take moving that much further afield from where you really want to live to benefit from significant reductions in price.
To check this option fully use a website like Zoopla or Rightmove where you can use map view and, starting from the area you’d ideally like to live in, drag the search area out to the sides and see what happens. If the prices don’t drop enough, drag further.
Make sure you check how much the extra distance will increase your commuting costs by though to ensure your monthly outgoings won’t become too much.
If you do this and find you’re not willing to live in the area you can afford to buy in, another option is to buy there but continue to rent in your preferred location. There are numerous benefits to this and if you would like to explore this further visit the buy to rent outsection of our site.
As mentioned in the section on calculating what you can afford to borrow banks will usually lend 4 times a joint salary.
The joint salary calculation doesn’t have to come from you and your partner, it could be a friend, colleague or a family member.
In the example from the step by step guide to buying section where someone is earning £16,000 and therefore could borrow approx. £80,000 on their own, if they teamed up with someone else earning the same it would then mean they could borrow approx. £128,000.
It would also mean there would be two of you to contribute towards the deposit.
Be careful though, people’s circumstances and relationships can change therefore if you’re going to partner with someone make sure you’re clear on what would happen in different eventualities e.g. one party wanting to sell before the other, and draft up a contract that reflects this agreement. Speak to a solicitor about getting a deed of trust.
We regularly get people coming to us looking for someone to partner with on properties, therefore if you would like help finding a property partner or would like to discuss the option of us investing with you (it’s ok we won’t move in) just get in touch on firstname.lastname@example.org
Rent to Buy
Some landlords will be willing to discuss an option where you agree to rent the property for a number of years and during this time you have an option to buy the property at the price you agree now.
The benefit for you is that in a few years time, although you will have saved more money for a deposit, property prices may well have gone up too, therefore having agreed the price based on today’s market, will give you the best chance of being able to afford to buy the property in the future.
This also means that although you won’t technically own the property until you take out the option to buy the property, you do control it, and therefore would have the right to make any changes to make it feel more like home, ie redecorating etc..
The downside of this is that it will normally require you to take on the responsibility of maintaining the property as well, including paying for all of the repairs a landlord would normally cover such as boiler repairs and maintenance. You may also be expected to pay for some of the other property related fees like service charge or ground rent.
The reason this makes sense for the landlord is that it means they will have guaranteed tenants for the time period agreed, rather than having to search for new tenants every year which is frequently the case. It will also mean it’s in the best interests of the tenants they have to keep the house in good repair.
There are many legal factors that need to be covered so please get in touch if you would like to find out more or see if we have any properties we could offer this to you on at the moment.