Are you on the property ladder yet? Well, if you’re struggling to buy your first home, you’re certainly not alone. Whether you’re living at home with your parents, renting with friends or on your own, owning a home is the goal for the majority of UK adults. However, it is often easier said than done, according to the Office for National Statistics’ 2021 census:
- 62.5% (15.5million) of households owned the property they lived in
- 37.3% (9.3million) rented their accommodation
- 0.1% of (33,000) households lived rent free
In this article, we cover exactly what the property ladder is, why it is important and the key benefits of being on it.
What Is The Property Ladder?
Sometimes referred to as the property ladder, or the housing ladder, this is a popular term, widely used across the UK to describe the housing market. More specifically this is used as a metaphor of where you sit on the ladder.
The ladder indicates the series of stages that home buyers go through when buying property. Typically, you often buy a small house or flat first, then as you sell you buy progressively larger or more expensive houses, using the profits from the previous stage to move up the ladder.
How Do You Get On The Property Ladder?
The housing market is constantly changing and moving. To get on the property ladder, first time buyers often find that they have to save a deposit, find their home and get accepted for a mortgage before they even get on the first rung of the ladder.
Luckily, our team of local Yeovil mortgage advisors have helped 100s of first time buyers purchase their dream properties and take that first step onto the housing ladder. Our experience has helped us create a wide range of resources for first time buyers, including:
- What are the benefits of being a first time buyer?
- 5 steps to increase your chances of mortgage approval
- How to save for a mortgage in the cost of living crisis
- A guide: first time buyer mortgage advice
- First time buyer mortgages explained: a step-by-step guide
Benefits Of Being On The Property Ladder
While it can be hard to get on the property ladder initially, once you’re on it, there are a fair few things you will start to benefit from. Our team of mortgage advisors, Yeovil have gone into more detail below:
1) Build Your Equity
When you purchase a house and start to pay off your mortgage, you will be earning equity in your property. Simply put, equity is how much of your home you own (compared to how much is owned by your mortgage lender).
When you own your home, every monthly mortgage payment you make the more of your home you own. You can work out how much equity you have by taking away your remaining mortgage payments from the total value of your property.
Equity offers many benefits and flexibility over your finances, which makes it a popular choice when it comes to increasing your funds.
Equity can only be built up on properties that you own, not on properties that you rent, which is why it is a good idea to get on the property ladder. The longer you’re on the property ladder, the more equity you can build up.
2) Benefit From Housing Market Increases
The housing market is constantly changing, with housing prices rising and falling alongside the financial climate. Demand for properties will always help to increase housing prices.
When you’re on the property ladder, you can use these periods of housing price increases to your advantage, potentially being able to sell your property for more than what you purchased it for. This additional profile can then help fund your next home, thus, helping you creep up higher on the property ladder.
3) Invest In Your Future
When you don’t own your own property, the likelihood is that you’re renting. While paying for a mortgage and renting both require you to pay a monthly sum, with your mortgage, you’re earning back equity on your property.
When you retire, if you own your home, you’re more than likely to have already paid off your mortgage, and no longer need to worry about monthly expenses (outside of bills and other necessities). However, if you’re still renting when you retire, you won’t have that luxury and will still have to pay rent, even when you’re no longer working.
The earlier you put your foot on the property ladder, the sooner you can start to move up the rungs and save more equity and money for your retirement.
4) Increased Freedom & Security
When you’re renting a property, you’re often constrained by thinking about:
- Making your monthly rental payments
- Ensuring no damage is inflicted on your property
- Potential concern over increased rent
- Potential concern over landlords’ discretion (they may want to take their property off of the rental market, sell the property or choose to rent to others)
- Whether you’re allowed to paint the walls, hang up painting or get that kitten you’ve always wanted
However, when you own your own home, all of those worries and concerns go out of the window. You can do whatever you like in your own home, have cats, dogs, mice or even snakes for pets. Paint, renovate and hang pictures up to your heart’s content.
5) Being On The Property Ladder Makes It Easier To Purchase Again
Your first home is often not going to be your absolute dream home. Instead, think of your first home as a stepping stone to your dream home. Just because you’ve bought a property, does not mean that you will be staying there forever.
When you’ve bought your first home, it can make the process of purchasing a second home and moving homes a bit easier. Not only will you have your first home, but you will also have proof of mortgage payments and a good credit history to help with the mortgage application process.
For more information about moving up the property ladder or moving home, see our blog posts:
- Do I need to pay stamp duty? All you need to know
- Moving home? Our top tips when buying a new home
- Porting a mortgage, what is it, how it works and more
We Can Help You Get On The Property Ladder!
Whether you’re a first time buyer or looking to move up the property ladder, our team of Yeovil mortgage advisors are on hand to help. We offer expert and jargon-free advice to help you find the right mortgage to best suit your needs.
With weekend and evening appointments available, it’s never been easier to speak to one of our award-winning and local mortgage advisors. For more information or to book your free initial consultation either email admin@thelevelsfinancial.co.uk or call us on 01458 772040.
Because we always have your best interests at heart, you need to know that if your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.
