The number of first-time buyers has dropped significantly for the first time in years. Whether due to the physical restrictions of the coronavirus pandemic, or anxieties over the cost-of-living crisis, many first-time buyers have seen their hopes of getting on the property ladder diminished.
The so-called ‘property ladder’ describes stages of residential property ownership; the first rung is your first home, with subsequent rungs representing larger, more valuable homes that your existing home can help you afford. But getting on the property ladder can be difficult for first-time buyers, and many may feel dissuaded from trying to purchase a home owing due to the barriers to entry. But owning a home can not only be more freeing than renting; it can be more economical too. Here are the benefits of getting on the property ladder as a new homeowner.
The upfront cost of a home, especially your first, can be daunting at first glance – but despite appearances, buying a home can be substantially cheaper than continuing to rent. As of December 2020, it was 9% more expensive to pay rent than it was to make mortgage repayments, on average. While paying a substantial deposit at the start of your ownership can impact your finances in the short term, that deposit is in service of longer-term savings.
Not only are you saving money from the decreased monthly expenditure on your home, but you are also building your equity at the same time. In paying rent, you’re practically pouring money down the drain, merely sustaining a present living situation in which you have no real stake. The money you pay towards your mortgage is not simply disappearing into the coffers of a third party; it represents the increased ownership of your own property.
A Safe Investment
Owning a property is a worthwhile long-term investment, especially as property values tend to grow over time. Prices rise and fall here and there, but these market fluctuations represent opportunities to increase your income – and in the long run, your house will tend to appreciate value faster than the rate of inflation, ensuring you get the most of your initial investment.
Easier to Climb
The hardest rung to reach on the property ladder is the first one. Saving a deposit while paying rent can be tricky, even if there are two of you working full-time to achieve that goal. Once you have secured your first property, though, it is far easier for you to move up successive rungs of that ladder – whether moving at your own pace, to reflect any increases in earnings or requirements from your home, or in developing properties to sell at a profit.
A Home of Your Own
Financial benefits and incentives aside, owning your own home can greatly improve your quality of life, if for one key reason: the home is yours to do with as you wish. Many rented properties do not perfectly suit the lifestyles of their residents, and rental agreements tend to prevent the tenant from making any changes to the property, even down to the putting up of personal effects on the walls.
Landlords are also disincentivised from making renovation changes to the house unless they are between tenants, making it unlikely that you will receive any quality-of-life requests as a tenant. In owning your home, you can do what you like to your property, from a lick of paint up to knocking walls through and building extensions. In this way, your home can suit your personal needs perfectly.