95% mortgages probably won’t help you buy a home, so what next?

Will Leyland, 30 April 2021

There’s been an awful lot of attention paid to First Time Buyers (FTBs) in the media in the past few months and, in truth, probably the last few years.

Thanks largely to a relatively unhealthy obsession with property ownership for the under-30’s in the UK, there is now something of an anxiety and confidence crisis in the under 35’s in this age group the UK when it comes to purchasing a home. The pressure to buy is often so great that younger people can sometimes get themselves into financial issues by overstretching themselves, not just to get a deposit together, but also by taking on unaffordable mortgages that leaves them with little disposable income.

It can feel a little maddening at times when media outlets treat home ownership as the nadir of financial independence for younger workers in the UK, and certainly people under 30.

Whilst it’s true that home ownership, as a percentage, was much higher in years gone by, it’s also true that people’s priorities, incomes and lifestyles have vastly changed. Take, for example, the fact that the number of people in the UK who class themselves as having no religion in the UK has increased by 46% in just ten years, whilst the average age of mothers at childbirth has increased from 28 in 2000 to over 30.

These statistics, in isolation, can feel stark and the result of something bad but, in truth, it’s just the evolution of a society that people’s priorities and lifestyles change.

Back to home ownership, and the latest step by the government to encourage this is a government backed scheme for 95% Loan To Value (LTV) mortgages, but these are still unlikely to help the majority oftoo many people for a number of reasons.

95% Mortgages

It may sound like a vote winner, and undoubtedly a good thing for the government to try and help out First Time Buyers, however, analysis by the Guardian has found that “single buyers in their 30s on the UK median wage will still be locked out of buying a home in about half of local authority areas in England and Wales.

Although two salaries will make it easier to raise a large mortgage, those on the UK median earnings for that age group will be unable to afford to buy a home.”

So, whilst it’s not an awful idea, in principle, it’s pretty unlikely to help you buy a property until you’re at least in your mid 30’s. So, what’s the answer then?

The benefits of renting

First and foremost, let’s just say that renting is a lot more attractive and has many more benefits than people give it credit for. On a simple cost-based analysis, even if a mortgage on the same property would be £100 cheaper per month, once you factor in maintenance, insurance and the cost of running your own property, that difference is whittled away pretty quickly.

Aside from that, access to rented property is much quicker, much cheaper, and much easier than entering a property chain, arranging a mortgage, and then moving. Renting allows you to move quickly and easily and allows you to more or less pick your location. Renting isn’t quite as bad as people might have you believe.


Will Leyland, 30 April 2021