You’ve no doubt heard how hard it is for first-time buyers to get onto the property ladder. But, no-one really talks about what happens next.
Does the struggle end once you own a property? Or could it be just as hard to make the move to your second home?
According to research from Nationwide, 89% of people who already own their first home believe that making the jump to a second home is more difficult now than it was 10 years ago.
Barriers to buying a home
For first-time buyers, the biggest barriers to securing the ideal home are:
- Local house prices (33%)
- Unaffordable mortgage payments (24%)
- Fear of failing to get a mortgage (17%)
- Existing debt (20%)
- Solicitors’ or mortgage arrangement fees (15%)
- The cost of stamp duty (8%)
- Stagnating wages (11%)
(Source: Yorkshire Building Society)
Meanwhile, the issues holding second-time buyers back are not that much different:
- House prices (38%)
- Location (25%)
- Deposit required (18%)
- Moving costs (15%)
- Negative equity (8%)
As a result, one in five (21%) said they have found themselves stuck in a house that is too small for their family or in an area they don’t like due to housing affordability (16%).
Making bigger sacrifices?
85% of people looking to move to their second property will need to make sacrifices to do so. These include smaller things such as:
- Nights out (55%)
- Eating out (48%)
- Holidays or weekends away (33%)
But can also range to substantial lifestyle changes, including:
- Changing career or job (27%)
- Increasing working hours (26%)
- Delaying plans for starting a family (19%)
- Postponing wedding plans (16%)
- Leaving their spouse or partner (14%)
10% of people who own their first home say that the sacrifices they had to make to get there were not worth it. Meanwhile, 40% say that their children have been affected by the lifestyle changes necessary to afford to buy a house.
The most common sacrifices among first-time buyers include:
- Moving away from family (40%)
- Leaving friends behind (31%)
- Increasing the commute to work (28%)
- Giving up additional bedrooms (25%)
- Compromising on having a garden (15%).
While these sacrifices may have been part of making a first home purchase, those who are looking to buy their second property are less willing to compromise on their ideal home. Second-time buyers may be willing to give up:
- A conservatory (35%)
- A garage (29%)
- A driveway (22%)
- The ideal school (20%)
But, for many home movers, there are some factors which are non-negotiable. In fact, 21% are unwilling to sacrifice any of their requirements. Which may explain why 35% are delaying their second home purchase until they find the right property.
So, who has it worse?
It is difficult to say, given that the profiles and needs of the two groups are so far apart. Though first-time buyers are more commonly discussed, both groups face similar issues when looking to buy a home.
Fortunately, there are options available for both to improve their home-buying prospects, through careful financial planning and with expert help.
Some things are never worth sacrificing
It may be necessary to make some cutbacks when looking to buy a new property. However, there are certain things that you should never give up, including:
Workplace Pension: If you are enrolled into a pension scheme which sees both you and your employer make contributions to your eventual retirement income, do not opt out of it. It can be tempting to have that money available to you immediately. But, the added employer contributions and tax relief mean that you are giving up far more in later life.
Credit rating: Don’t take risks with your credit to secure a home. If you are working to improve your credit score, it is better to wait until you can access affordable interest rates through reputable companies than risking defaulting on high repayments and losing the home you have worked hard to secure.
Physical safety: Moving into a less-reputable area may mean that you can afford a bigger home, or that your mortgage repayments are lower. However, it is not worth sacrificing your mental wellbeing and potentially becoming a victim of crime as a result. 14% of people living in their first property have moved to a higher-crime area for affordability. As a result, 18% have witnessed burglaries and 30% are paying higher home insurance premiums.
Happiness: Buying your first or second home should be a positive step in life. If you find that giving up your ideal location, number of bedrooms or facing a longer commute makes you dread move-in day, then it is worth reconsidering whether it is the right property for you.
Turning dreams into reality
When looking to buy your first, or next, home, it is likely that you will face obstacles and difficulties. A financial adviser can help you to overcome these issues and create a plan which will take you from your current position, to owning a new home using methods and strategies which suit your needs, aspirations and lifestyle.
For more information, get in touch.