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Can First-Time Buyers Afford To Live in Nottingham?

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Can First-Time Buyers Afford To Live in Nottingham?
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Buying your first home is a considerable investment that requires lots of consideration. But after the number of first-time buyers fell to the lowest level in a decade last year, how easy it is to buy a house? In this post, we’ll explain why Nottingham’s affordability makes it an accessible location for first-time buyers. 

Nottingham’s current housing market

Cast your mind back to 2020. As society gradually reopened following the pandemic, we saw a house-buying frenzy due to historically low mortgage rates and a stamp duty holiday. Many experts considered it one of the best times to buy a house.

By mid-2021, the boom had finally slowed down, though, and a worldwide surge in inflation began to cast a long shadow over the housing market. Only two years later, the Bank of England’s base rate for interest had hit a 15-year high.

Demand for houses dropped because fewer people could afford to buy them as the cost of living increased. As such, house price growth stagnated. There were even tentative predictions of a housing market crash, but that has yet to materialise. Within the space of two years, the record-low interest rates felt like a distant memory. 

We say all this to show you how easy it is to look at the constant news cycle, get lost in all the statistics and doom and gloom, and conclude that buying a house is pointless. But is it really a bad time to buy one? We don’t think so, and here’s why. 

Why now might be a good time to buy a house

According to Rightmove’s House Price Index, the average new seller asking price is £359,748 as of January 2024. 

Although this is a high number, it doesn’t tell the whole story. According to Zoopla, the UK housing market remains a “buyer’s market”, with one in four sellers accepting offers that are at least 10% below the asking price. 

Buyers are in a strong negotiating position at the moment because, in many pockets of the country, there isn’t a high demand for housing. Buyers are especially advantaged in cities like Nottingham, where the average house price is substantially lower than the UK average. More on that later.

If you can afford to buy and you want to buy, now might be a good time to make your move. But how do you know if you can afford to buy a house?

Can I afford to buy a house?

The best way to determine if you can afford a house is to use a free online mortgage calculator. You can play around with some numbers to determine how much a mortgage could cost you. 

Typically, a first-time buyer deposit is 10% of a property’s value, with the remaining 90% borrowed from a lender (a 90% loan-to-value ratio). You’ll pay this back every month over the course of your mortgage term, which is usually 25 years, but can be longer or shorter.

Here’s a quick breakdown of how much you could pay with that type of mortgage:

Say you want to buy a £250,000 house in Nottingham with a 90% loan-to-value ratio and 25-year mortgage term. Your mortgage rate was 5.25% (the current base rate). In this situation, you’d have to pay £1,348.31 per month for your mortgage. 

That said, saving for a bigger deposit is advantageous because it will make you eligible for the best mortgage deals and lowest interest rates. This will allow you to make smaller monthly payments and have less to pay back overall. You’ll also have more equity in the property from the start.

High credit scores will also open you up to the best mortgage deals. As a first-time buyer, working with a mortgage broker may also be in your best interest. They can do the leg work of searching the market for the best deal. If you’re self-employed, this will definitely be your best option. 

As a rule of thumb, lenders usually allow first-time buyers to borrow an amount equal to five times their annual income. For this reason, buying a property in joint names is increasingly common in the UK. It makes up about two-thirds of all first-time buyer purchases.

On top of your deposit, you’ll also have to make other payments before purchasing the house—fees for solicitors and homebuyer surveys, to name just a few. You’ll need to take all of this into consideration before taking steps to buy a house. Of course, your lender will also do an affordability check.

This is where Nottingham comes in as a fantastic option for first-time buyers.

Why buy a house in Nottingham?

According to Rightmove, the average house price in Nottingham was £252,745 over the last year. It’s a sizeable difference from the national average. When you isolate semi-detached and terraced houses, the average prices drop to £235,697 and £181,876, respectively. If we follow the 10% deposit rule, a first-time buyer must save approximately £25,000 to buy a house in Nottingham.

That’s why Nottingham should top your list if you’re looking for an affordable city to live in. What’s more, you can get support to make buying your first home even easier. 

Support to buy a house in Nottingham

The government’s Mortgage Guarantee Scheme has made buying property more accessible for many homeowners in Nottingham. The scheme allows you to buy a house worth up to £600,000 with a 5% deposit and isn’t limited to new builds. 

As a first-time buyer, you’ll also be exempt from paying tax (stamp duty) on purchasing your property if it costs less than £500,000. 

If you’re planning a move but need to sell your flat fast, We Buy Any Home can buy your property in as little as 7 days with no hidden fees. 

Where should you live in Nottingham?

Nottingham contains several affordable boroughs with excellent schools, amenities and transport links. Whatever your needs and preferences are, Nottingham has an area that’s likely to meet them. 

Nottingham’s Creative Quarter is an excellent place to live if you’re a young professional. It contains Hockey, Sneinton and the Lace Market. Here, you’ll be on the doorstep of the city centre and living in one of the most desirable neighbourhoods in Nottingham.

If a place like that isn’t your cup of tea, you can discover other areas in our blog post about the best places in Nottingham to live as a young professional.

If you’re planning to start a family and want a quieter neighbourhood, Gedling, Beeston, and Wollaton are great locations within a few miles of the city centre. They’re quiet and safe areas with good housing stock. 

Further afield, but still within the boundary of Greater Nottingham, you have Hucknall, Arnold and Long Eaton, where house prices fall below the national average. 

Read this blog post to discover the most and least affordable postcodes in Nottingham

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