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Indianapolis First Time Home Buyer

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Problems Faced by First Time Buyers

The problem of first time buyers is that they are no longer able to buy a house. Houses have turned unaffordable.

House prices have shifted out of the grasp of even dual-income families.

First time buyers are taking a long time to own a house of their own. In other words, these buyers are much older than the buyers who purchased a few years back.

These new house owners are now expected to spend phenomenally more than the first time buyers of a decade back. As a result, the buyers of these times are heavily burdened by debt.

Buyers today are spending about 204% extra than their counterparts who ventured into the real estate market 10 years back. But, income levels haven not increased in a similar manner. The difference between an increase in the house price and increase in wage rates stands at 110%.

As the first time buyers are buying later in life, at exorbitant rates, they have to repay in lesser and heavier instalments.

Older-aged first time buyers have added pressure on the rental market. Increase in demand without matching supply levels have forced the rent up.

This has become a Catch-22 situation. A couple has to save more to buy a house. But, the increased expenditure (in the form of rent) reduces savings.

With increase in demand for rental houses, investors are heavily investing in the buy to let segment. This demand from their side has further pushed up the house prices.

Desperate people are now ready to take loans on higher rates of interest. They are overstretching themselves in their eagerness to not miss the property boom.

Finally, non-property buyers are turning poorer. Their earnings or savings are not enough to enable them buy a house. Wealth is being transferred to the older generation.

Help by Government for First Time Buyers

The government has taken many steps to alleviate the problems of first time buyers.

Open Market Buy Scheme

The UK government announced that it planned to help 100,000 people on to the property ladder by 2010 by promoting the shared ownership scheme and other initiatives.

The government has launched the Open Market Home Buy Scheme to benefit the first time house buyers. Under this scheme, the buyer will fund 75% of the property cost. The rest of the amount will be equally shared by the Government and the lending agency.

Housing Information Packs (HIPS)

Another scheme of the government that will greatly help the first time buyer is to be introduced this June. Called ?housing information packs? (HIPS), the first time buyer need not pay for the legal services, structural survey and mortgage valuations. These costs will have to be borne by the seller.

Parents Help their Children Buy Property

4 out of 10 first time buyers had received financial help from their parents to buy property. Parents are lending their children huge amounts to pay the deposit money.

The younger the children the more likely they are to receive financial help from their parents.

The Future

Rising house costs are making it difficult for the first time buyers to buy houses. Their elimination from the market is a disturbing factor. The steps taken by the government to help them seems inadequate. Parents are also pitching in to help their children, but these measures, can at best work temporarily. The runaway market should be controlled.

Indianapolis First Time Home Buyer

You will also become a ?homeowner?, which should please your bank manager no end. You may find offers of loans and credit suddenly become a lot more frequent, and when you've just moved into a new home it can seem tempting to borrow money to kit the place out. But be careful! Most repossessions happen in the first year of the mortgage, when people find they have overstretched their finances and can't meet the repayments. These are a few factors you'll need to consider before you move:

Fees and Stamp Duty

You'll find there are quite a few extra costs involved here ? solicitors fees for conveyancing are normally a percentage of the cost of your mortgage, plus there are other charges involved. Check with your solicitor what his or her bill will be. Stamp duty is a tax that applies on property that costs over ?100,000. If you've used a mortgage advisor, there will be another fee to pay, probably of a few hundred pounds.

Surveys

These can prove costly ? each survey will set you back around ?150 to ?200 pounds. Sometimes the surveyor will ask for a report from a specialist ? for example, a timber professional ? that could cost the same again. If there are problems with the property that need to be remedied, you may find a portion of your mortgage withheld until the work is carried out. This is called a retention, and means you'll have to find the extra cash yourself.

Moving Costs

You could move your entire household in the back of your car, but it's not the ideal option! Hiring a van or removal men can be quite expensive ? but it might make moving less stressful.

Insurance

Remember you will need to pay buildings insurance as a condition of your mortgage. You may also choose to take out payment protection in case there's a sudden change in your circumstances. This means your payments will be covered for a set period of time, to give you a chance to get back on your feet.

Furniture and Renovations

While not necessarily essential, re-furnishing your new home should be enjoyable! Make sure, however, that you are not overstretching your budget.

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About Author

Both James Walsh & Joe Kenny are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

James Walsh has sinced written about articles on various topics from Small Business, Binding Machines and Divorce and Infidelity. James Walsh is a freelance writer and copy editor. Choosing the right is a decision that shouldn't be taken lightly, for more information on the options avail. James Walsh's top article generates over 368000 views. to your Favourites.

Joe Kenny has sinced written about articles on various topics from Mortgage, Credit Cards and Life Insurance. Joe Kenny writes for the UK Loans Store where you will find information and reviews of the latest and offer more information on. Joe Kenny's top article generates over 49500 views. to your Favourites.

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