The London housing market is a juggernaut that just keeps on going. The most recent batch of figures showed that prices jumped another 14 per cent in the last year, with the average home in the capital costing about £470,000.
For that, you’d need about £60,000 in deposit and Stamp Duty alone, with moving costs and fees on top of that. If that’s the price of the average property in the capital, then it’s clear that the cost of your dream London home will be significant.
But that shouldn’t kill off your dream. It should, instead, serve to demonstrate that you need to take your dream seriously and plan ahead to be able to achieve it. Here’s what to bear in mind:
Cost it all out… and think long term
What is your dream home? Where is it? What does it actually cost? If you really, genuinely, want to get it then it’s time to step out of the world of dreams and into reality. Cost everything, factor in continuing price growth and prepare to be patient.
Don’t forget the importance of patience either. Are you slightly in love with the big pad your parents had when you grew up? That’s fine, but remember that they had to work a long while to be able to afford that themselves. Your dream home is something to work towards, don’t expect to be able to get to it right away.
Get serious and have a spending audit
Once you have those numbers it’s time to take a deep breath and turn to your own situation. Go through your spending line by line to get an exact understanding of your outgoings, income and savings. Use this process to spot opportunities for savings, whether that be switching energy suppliers, cutting subscriptions or getting tough in the amount you spend on clothes.
The healthier your finances, the better chance you’ve got of getting that dream home. Break down your financial target into small, achievable savings goals so that you can see real progress from your efforts right from the start.
Get on and up the ladder
Your dream home might well be out of reach for now but that’s fine. It’s important to make sure you get on the ladder and then move up it. If prices continue on their current trajectory, then you will gain some equity by simply being on the ladder. That £470,000 average London home is up £60,000 on last year alone while even the average house elsewhere in the UK picked up £16,000 on 2015. Invest, grow, upgrade, repeat.
Push yourself to earn more
It stands to reason that you’ll have a higher deposit – and gain a greater mortgage – if you earn more money. Let that dream home spur you on in your job and use it as an incentive to earn a bonus, pay rise or promotion. Hard work pays off in the end.
Make the most of your existing savings
With interest rates low, you can’t afford to just keep your savings sitting stagnant in the bottom of your current account. Price rises means that this money will, in real terms, fall in value while sitting there. Get the best savings accounts you can so that your money grows at a decent rate. Explore Government schemes that are set up to help first time buyers while you’re at it. Anything that saves you money in the short team will be handy for the long term too.
Bank of mum and dad
Don’t be embarrassed to see if your parents can help to get you over the line. A recent study showed that parents are behind about a quarter of house sales in the UK. If put together, this £5 billion spending power would make them a top ten mortgage lender. Many parents are sitting on a pot of cash and would be willing to lend some to their children for something as important as this.
Tap into the knowledge of experts
The London property market is fast paced and expensive and that means you’ll need help. Make sure you speak to someone with a good track record who employs staff that have the knowledge and passion needed to help you make sense of it all. Many local estate agents also offer research and insight into the market that can be freely accessed online to help you understand the latest trends.