Canít buy? Wonít buy! – The changing pattern of home ownership

Just 30 per cent of people believe theyíll buy a property in the next 12 months ñ a drop of ten per cent since last year, according to a recent survey.

The biggest barrier is getting a mortgage, cited by more than 25 per cent of respondents, and finding a large enough deposit. But even those who have decided they have no choice but to keep on renting are having problems, as there is stiff competition for good properties, leading to recent reports of gazumping .

So what can you do? Here are five common dilemmas faced when youíre trying to get a roof over your head ñ and some ideas for how to solve them.

Property is expensive

The average house price in the UK stood at £232,628  at the end of 2010, up 5.5 per cent on the previous year. Put simply, the average salary of £25,948  is unlikely to be able to keep up ñ especially at a time when day-day living expenses are rising. At the same timeÖ

Prices are falling

Fears about the economy, the prospect of major job losses and even stock market jitters caused by the earthquake in Japan are likely to mean that people are unwilling to commit to such a huge purchase, when it could easily fall in value in the next few years. Even if youíre feeling braveÖ

You need a big deposit

Time was you could get a 90 per cent mortgage. Now theyíre on the endangered list, according to the Chartered Institute of Housing , who report a slump from the 2006 high of 245,000 to a low in the last year of just 28,000. It found that the average first-time buyer needed a 30 per cent deposit to qualify for a mortgage in 2009. The normal solution: get a loan from the bank of mum and dad. The Institute calculates that at least 100,000 potential first-time buyers who couldnít borrow from their families were unable to enter the housing market last year.

And you canít find a decent mortgage anyway

Banks and building societies are understandably cautious, so they are not only asking for a substantial deposit ñ probably around £70,000 for a home costing the UK average price . They also want to see a good credit history detailed in your credit report, which lists accounts such as cards, loans, catalogues, interest free credit and even mobile phone airtime subscriptions. If youíve skipped a few repayments on your credit card or forgotten one instalment of a car loan recently, they may not be interested.

So you look for a place to rent

Again, you have to find a substantial deposit ñ and if your credit status isnít up to scratch, you could be turned away. Landlords often ask if they can carry out a credit check on you before theyíll sign a contract. If they see that you havenít been a responsible borrower in the past – for example, you’ve incurred court judgments for unpaid debts ñ they may look for someone more reliable.

So what could you do?

ï Check your credit report to be sure itís accurate and up to date. If you find any errors, contact the relevant lender and get it amended. Itís free to see your Experian credit report with a 30-day free trial of CreditExpert .
ï Perhaps club together with friends or family members to buy a starter home and investigate shared ownership schemes from developers or housing associations.
ï Think about maybe moving back to your parentsí home, and cut back on luxuries while you save every penny towards a deposit.
ï Tidy up your credit history. Close unused accounts, add a note of explanation if special circumstances (an illness or accident, for example) account for past problems and make your repayments on time, every time ñ a missed or late repayment stays on your credit report for at least three years, damaging your chances of getting the mortgage you want.
ï Resist the urge to splurge. Lenders like responsible borrowers, so try not to max out your credit limits.
ï Do your research. Visit price comparison sites, go to a mortgage broker ñ and only apply when youíre sure youíve found the right deal. Every application will leave a record on your credit report. If there are lots in a short period, other lenders may think youíre desperate or even scent a fraud.
ï Check your credit score. You can see your Experian Credit Score for free during a 30-day free trial of CreditExpert.

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