One man was able to buy his parents’ house once they retired as his first property.
With house prices and interest rates high, many first-time homeowners are struggling to find ways to get on the property ladder.
Ben Rich got help from his parents to get on the property ladder — but not in the usual way, he told The Times.
The 36-year-old decided that when his parents retired and downsized, he would buy their three-bedroom home.
This way he was able to save a huge deposit over the years, as well as stay in his childhood home.
After four years saving up £49,000, Mr Rich bought the family home in Bristol for £325,000.
Whilst some parents offered help towards the deposit, his parents did not give him a discount, but he was able to save on estate agent fees.
He has a £276,000 mortgage with a 30-year term and a five-year fixed rate of 5.69 percent with repayments of £1,526 a month.
To make this more affordable he has taken a lodger, Alex Chamberlain, a family friend, who pays £650-a-month rent.
Mr Rich told The Times: “What makes it special is that it’s not a typical first-time buyer home.”
Since 2011, many first-time buyer homes were either studios, or one or two bedrooms — according to the estate agency Hamptons. In 2020 45 percent of first homes were small.
And as the cost of living continues to bite, it’s not easy to save capital, especially for those who are renting as this takes a substantial amount of income in certain areas of the UK.
A survey of 2,000 18 to 39-year-olds by the property site Zoopa last week found that 31 per cent of those who didn’t already own a home would be open to a part-ownership or help-to-buy scheme, and 18 per cent would buy with a friend, colleague or sibling.
Mr Rich aims renovate the house’s garage and extension into another two or three- bedroom property, but that is at least ten years away as he builds up equity.
For now he is content with “a little bit of tweaking” to the kitchen and updating his parents’ style by changing the wallpaper and light fittings.
He took a specialist Rent-a-room mortgage from Bath Building Society, which is designed for those taking a lodger. It takes into consideration the rental income you receive as well as your salary to determine how much you can afford to borrow.
The carpenter concluded: “My only rule is to be mindful of power use: don’t use the tumble dryer when the weather’s nice and don’t take 30 minutes in the shower. The rest will work itself out.”
Buyers are taking longer-term mortgages to make their repayments more affordable.
Many are giving up hope of a 25-year term and 30 or 40-year loans are becoming more common. UK Finance, the trade group, said that 19 percent of first-time buyer loans taken out in March were for 35 years or more, up from nine percent in December 2021.
Payments on a £200,000 mortgage at six percent would be £1,289 a month on a 25-year term, but £1,140 at 35 years.
Britons will pay more interest overall on a longer loan, however, monthly payments will be lower.
