It may come as something of a surprise. After all, the entire UK housing market is currently said to be in the doldrums and many people are struggling to make ends meet in a generally ailing economy. Yet according to a recent survey by the Council of Mortgage Lenders (www.cml.org.uk/cml/publications/research), a whopping 81% of British adults aspire to own their own homes within the next ten years. Bucking even the most encouraging present economic trends, a hopeful 74% of the population even reckon on owning their own homes within just two year’s time.
Even the most optimistic of housing market commentators recognise that there is probably going to be a rather wide gulf between the number who aspire to achieve home ownership and those that actually manage to achieve that dream, the survey statistics help underline (yet again) just how deeply engrained is the Englishman’s aim to own his own “castle”.
Turning dreams into reality
Given such widely held aspirations and the economic climate so apparently stacked against you, what might be some of the most common factors helping to turn those dreams into reality?
• Your mortgage – for the overwhelming majority of those budding home buyers, of course, the availability of a mortgage will be the crucial factor. Despite some popular belief and all the doom-laden press since the financial crisis of 2008, mortgage are still to be found across the entire range of the housing market;
It is true of course that responsible lenders are – quite rightly – considerably more cautious than in pre-crisis days. It is in neither the home buyer’s nor the lender’s interests to provoke negative equity (where the size of the outstanding mortgage debt outweighs the value of the property). One of the principal ways in which lenders try to head off such problems is by requiring the borrower to put down a larger deposit than in the past. Although the actual requirement will of course vary from one mortgage lender to another, a useful rule of thumb might be to aim for between 20% and 25% of the purchase price as your deposit;
• Your credit – risk-averse mortgage lenders are also likely to take a much keener interest these days in your existing credit rating (the record kept by the main credit reference agencies on your history of repaying – or otherwise – your past debts);
A mortgage may not be out of the question if you have anything other than a faultless credit history – but you may certainly expect to pay more for your mortgage (through a higher rate of interest) if you have experienced past difficulties in repaying your debts;
• Staying in control – although the tighter restrictions imposed by mortgage lenders themselves may help prevent some prospective home buyers from over-stretching themselves and their finances, home ownership is ultimately, of course, the responsibility of the individual home buyer;
If you are serious about home ownership, therefore, and the ability to continue to keep up the mortgage repayments over 25 to 30 years or so, you might want to ensure that you stay in control of your finances by not biting off more than you can reasonably chew.