Close up of a welcome mat that reads


● Over a third of first-time buyers fear experiencing a ‘house value drop/negative equity’
● More than a quarter (26%) of first-time buyers worry they won’t be able to match their deposit saving rate to the rate of house price rises
● 11% of people fear ‘breaking up with someone after buying together’

Figures* show that there are approximately 39,000 Google searches on average for ‘properties for sale’ in the UK per month. Despite clear interest in the property market, this buying process can be particularly challenging for those getting onto the property ladder for the first time.

But what are first-time buyers really worrying about? The mortgage experts at money.co.uk surveyed 1,501 first-time buyers to discover what they are most fearful of when it came to buying their first home.

Top Five First-Time Buyers’ Fears Revealed:

Fears %
1. House value drop / negative equity
31
2. Saving enough deposit vs rise in house price
26
3. Unable to afford your mortgage long-term
22
4. COVID-19 influencing a spike in prices
13
5. Breaking up with S.O. after buying together
11


The biggest concern raised by first-time buyers is experiencing a ‘house value drop/negative equity’. In fact, 31% of respondents said they are worried about their property becoming less valuable than the remaining value of their mortgage.

Nisha Vaidya, mortgage editor at money.co.uk, said: “There are a few things you should keep in mind if you want to avoid negative equity. Firstly, it’s important to make sure you pay the market value for the property, so don’t shy away from negotiating on the asking price.

“Secondly, the larger your deposit, the more equity you will have in the property. So, if you are able to save enough, putting down a bigger deposit is a good idea.”
While putting down a larger deposit is a great way to unlock lower interest rates and better mitigate shifts in house prices, over a quarter of first-time buyers said they are worried that they wouldn’t be able to save at the same pace as the rise in house prices.

Nisha Vaidya, a mortgage editor at money.co.uk, offered these tips for saving for a deposit:
● Setting a budget: In addition to understanding how much deposit you’ll need, there are other costs to consider when purchasing a home, such as survey costs, solicitor or conveyancer fees and insurance. But by setting a budget, you’ll be able to plan out your savings targets and start saving for your ideal home.
● Cut the cost of your rent: You’ve probably asked yourself the question ‘How to save money for a house’ multiple times, but one way is by paying less rent to free up more cash for your deposit fund. If you live alone, consider moving into a house share or living with family to save on rental costs.
● Get a lodger: If you live alone and have space, taking in a lodger can be a great way to help subsidise the cost of renting and give you extra money to save for a deposit. Before you begin your search for a new flatmate, check your landlord is happy for you to share their property and sub-let a room.

The third most common worry experienced by first-time buyers is being ‘unable to afford your mortgage long-term’ – a concern experienced by 22% of respondents. 

Nisha Vaidya added: “If you are worried about affording your mortgage, there are ways a buyer can get support. This type of support can include: a payment deferral, an extension to your mortgage term and a change to your mortgage type. If you are looking to buy a new home but have financial worries, using the Help to Buy scheme could offer you the support you need. 

This Governmental scheme offers buyers an equity loan they can use to help buy a new build home, allowing buyers to purchase a property with a 5% deposit and receive a loan for up to 20% of the property value, which will be interest free for 5 years. The buyers must then take out a standard mortgage for the remaining 75%.”

Moreover, the pandemic has affected us in many ways, and it has created new concerns in different aspects of our lives, including financial ones. The survey conducted by money.co.uk reveals that 13% of first-time buyers fear ‘COVID-19 influencing a spike in prices’.

This is not the only fear people have as a result of Covid-19. With many people becoming remote workers, confusion has arisen in regard to where it’s best to buy, in the eventuality of going back to the office. 5% of respondents have said they have concerns regarding the ‘uncertainty about location with working from home [WFH]’. 

Couples who buy together have also admitted that a big concern is ‘breaking up with someone after buying together’, with 11% of people fearing a separation could create difficulties with property related matters. 

Nisha Vaidya, a mortgage expert at money.co.uk, said:

“Getting on the property ladder can be a nerve-racking experience for first-time buyers, as being misinformed can cost greatly – whether it’s losing out on a dream home or losing a lot of money in the process. However, the best thing first-time buyers can do is do their homework thoroughly before embarking on this journey.
“Being equipped with the right information will cut the risk of encountering unpleasant scenarios that many first-time buyers fear, such as experiencing negative equity or being unable to afford a mortgage long-term. Once you are confident in your knowledge the process should be less risky and more exciting.”

Methodology
● Mortgage experts at money.co.uk conducted a survey in which 1,501 people participated. The question “As a first-time buyer, what is your biggest fear?” was asked.
● The survey sample is broken down as follows: 56.5% male respondents, 43.5% female respondents. 8.5% were aged 18-24, 19.5% were aged 25-34, 13.7% were aged 35-44, 17.0% were aged 45-54, 22.9% were aged 55-64 and 18.4% were aged 65+.
● Geographically, 77.7% of respondents were from England, 15.6% of respondents were from Scotland, 6.1% were from Wales and 0.7% of respondents were from Northern Ireland.

*Figures provided by https://ahrefs.com/.

Posted by Rebecca Grewcock