Can First Time Buyers Afford Buy in Preston?

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Can First Time Buyers Afford Buy in Preston?
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Preston, a city located in Lancashire, is home to some of the most affordable houses in the United Kingdom (UK). In fact, recent statistics have shown that the average house price in Preston is £134,000. If you’re planning to purchase a home in Preston, it’s necessary to have approximately that sum of money.

In addition, there are several housing schemes like shared ownership that can help first-time buyers make purchases in Preston. However, recent reports have shown that first-time buyers now need to borrow three times more than their salary to get on the Preston property ladder. 

How much money does a first-time buyer need? 

The exact amount of money a first-time home buyer needs in Preston varies on a number of different factors. These factors include the price of the property, down payments, legal fees, agent fees, and other charges. First-time home buyers in Preston need to understand that a fluctuation in any one of the factors may increase or decrease the total amount needed. 

In addition, first-time buyers should also know that when buying a house in Preston, the minimum down payment, in most cases, is 5%. So if you plan on buying a house that’s  £150,000, then in this case, you will need £7,500 as a down payment. However, it’s important to know higher down payment can decrease mortgage interest rates. 

Is there any help for first-time buyers? 

First-time home buyers in Preston can benefit from different affordable housing schemes. These housing schemes include shared ownership, discount market value, and help-to-buy schemes. These schemes are designed to help those who can not buy a home in the open market. Let’s look at each of them in a bit more detail. 

  1. Shared ownership 

In a shared ownership scheme, you are allowed to purchase a certain percentage of the property as opposed to buying 100% of it. The exact percentage you can buy depends on the condition of the property. 

Ownership can start from as low as 1%, and properties can be bought using a mortgage. The percentage of the property that’s not sold is owned by a housing association. The association charges affordable rent to buyers owning a certain percentage of the property. 

  1. Discount market value

Allowing first-time buyers to purchase a house at a price that’s lower than the market value is what this scheme has to offer. Basically, Preston has a lot of newly developed areas. 

Properties in these areas are offered at discounted prices. The discount is usually 20% or 33% of the market value. It’s important to understand that a discount market value scheme is different from a shared ownership scheme. In this option, the buyer has to purchase 100% of the property. 

  1. Help to buy

These are basically government-backed schemes that allow buyers to purchase a house in Preston. These schemes include the equity loan scheme and the ISA scheme. The equity loan scheme is available to those who wish to buy a property in a newly developed region. 

The government loan can be up to 20% of the property’s value, a 5% deposit is required, and the value of the newly purchased home can be up to £600,000. An ISA account can help you save from property, and the government will top up the saving by up to £3,000. 

How much can a first-time buyer borrow? 

The amount of money a first-time home buyer in Preston can borrow depends on a number of different factors. Income, conditions of the property market, and credit score are common examples of such factors. A buyer’s credit score helps determine their ability to repay the loans. Generally, the better the credit score, the more a buyer can borrow, and interest rates will also be lower. 

In addition, recent reports have highlighted that first-time home buyers in Preston have to borrow up to 3.64 times their income. As per recent statistics, the average income in Preston was £34,500 last year. When calculated, this means that the average income earner can borrow around £125,500. However, in comparison to the average house price in Preston, this might not be enough, so some additional savings will be needed. 

Do sellers prefer first-time buyers?

Whether sellers prefer first-time buyers or not is something that will vary from one seller to the other. However, this decision is based on a number of factors. The financial strength of the buyer is oftentimes the fundamental factor leading to a seller preferring one buyer over another as they believe it can help them sell flat fast

Preston, no doubt, is definitely one of the most attractive and affordable places in the UK. Whether a first-time buyer can afford to buy in Preston depends on a number of factors. These factors often include their income, property price, and mortgage rates. In addition, first-time buyers can also avail of different affordable housing schemes to buy a house in Preston. Reach out to us now to learn more about how we can help you buy your first house in Preston.

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