There is no doubt first-time home buyers are having a harder time climbing onto the property ladder than the buyers who purchased two years ago. Interest rates are higher, and house prices remain elevated after numerous record-breaking boosts to the average house price throughout the pandemic. Inflation has taken away money from budgets making saving for a deposit more difficult. In addition, many home buyers are coming to lenders with complicated credit histories due to the impact the pandemic had on their earnings.

However, homeownership is a powerful desire in the UK and some hopeful home buyers are becoming creative in their pursuit to purchase their first home. 

Viral trending videos of DIY home projects are common on social media. Short before and after videos reveal how homeowners have turned an overlooked or neglected property into the home of their dreams. Others give daily updates on their efforts so that viewers can learn and bypass their mistakes. By choosing a lower value property, they find an affordable home they can slowly invest in to increase its value. 

Unlike the trending personal ambitions of flipping homes to make a quick profit, these are home buyers purchasing to remain in the home for years to come. They have the vision of the DIY project becoming the home they may not have been able to afford straight off the market, or perhaps they couldn’t find the home they desired in the area they wanted. They create an affordable option that didn’t exist without their creative viewpoint.

Other first-time buyers are teaming up with their retiring parents to purchase a multi-generational home. The parents might have equity built up in their family home that can be used to make a substantial downpayment on a property that will serve the needs of a new and growing family while providing a private living area for the aging parents. The family determines how the future costs and maintenance of the property will be handled. It might be the responsibility of the younger generation to take on financial responsibilities, while the aging parents take on maintenance and care for the first few years. It provides the ability for the aging parents to downsize while the younger family grows into their space. 

There is also the option of house hacking. This is where the first-time buyers purchase a home that allows them to live in an area that is smaller and would have served as an option for renting while the larger part of the home is rented out to a family that will pay more due to having the larger portion of the home. This allows the new homeowner or homeowners to take in a significant income to be used to pay down debt on the property. In some cases, the new homeowner could pay down the entire debt in half of the time while having little to no expense as the rental fee covers the entire mortgage payment.

House hacking is more difficult as there are rules and regulations that should be reviewed when choosing to become a landlord. Also, the expected rental income will not be considered by the lender when looking to approve the mortgage request. The home buyer will need to qualify for the property without the expectation of the rental income to pay the mortgage debt.

In an effort to obtain a deposit, first time buyers have been known to turn to their parents for financial help. However, first time buyers are now turning to parents, extended family members, and friends to gather the needed funds. The larger the deposit, the less money the buyer must borrow. The lower the amount borrowed in relation to the value of the property is important in being approved by a lender for a mortgage and it determines the interest rates offered to the borrower. The loan to value ratio or LTV can be a very important part in obtaining the best interest rate offers.

Creative first-time buyers in the housing market are likely to grow in the coming year as rental costs soar. Using an unique way to afford a home will be for some the only if not the best way to become a homeowner. For some the journey will take them beyond the initial purchase as they will become long term investors of their time and effort to create their dream home, others will become co-owners with other family members, and some will become landlords living within their own new home.

Keeping first time home buyers in the housing market is important in keeping the market healthy and with higher interest rates and continued higher housing prices due to the previous year pandemic buying boost, using creative and unique ideas to become a homeowner is a way to beat higher borrowing costs.