Top 10 affordable locations for first time buyers revealed

Birkenhead, Hartlepool and St Helens are the three top spots in the country for first time buyers on the affordability front, new findings claim.

At the other end of the spectrum, first timers looking to snap up a home in Guildford, Bath, Woking, Oxford or London face a far tougher challenge when it comes to scraping together the required deposit and being able to afford mortgage repayments in line with their pay packets.

With lenders tightening criteria and scrapping a string of high loan-to-value deals, many face an uphill struggle getting a foot on the property ladder in the current climate.

Where should first timers buy? Birkenhead, Hartlepool and St Helens are the three top spots in the country for first time buyers on the affordability front

Where should first timers buy? Birkenhead, Hartlepool and St Helens are the three top spots in the country for first time buyers on the affordability front

Where should first timers buy? Birkenhead, Hartlepool and St Helens are the three top spots in the country for first time buyers on the affordability front

The temporary shift in stamp duty thresholds has also driven up competition among first time buyers and others already further up the property ladder.

But, using official earnings data, as well as houses prices in Zoopla’s latest property price index, online site Compare My Move has calculated deposit to income ratios to work out some of the best bets in terms of location for prospective first time buyers.

The average deposit required has, in this data, been set at 15 per cent, rather than 10 per cent or lower, as many lenders firm up their borrowing requirements for buyers.  

According to Compare My Move’s findings, Birkenhead, near Liverpool, comes out top of the pile for first time buyers keen not to stretch themselves too far financially to get themselves on the first rung of the property ladder.

With average property prices in Birkenhead at around the £109,000 mark, first timers will need a deposit of £16,355. A deposit to income ratio of 0.68 should make Birkenhead a desirable option for first time buyers. 

Hartlepool in County Durham is another solid option for first time buyers, with the second best deposit to income ratio in the latest rankings. 

Top 10 most affordable spots for first time buyers, according to Compare My Move data

Top 10 most affordable spots for first time buyers, according to Compare My Move data

Top 10 most affordable spots for first time buyers, according to Compare My Move data

Pricey: The five most costly places to buy a home as a first time buyer, according to Compare My Move

Pricey: The five most costly places to buy a home as a first time buyer, according to Compare My Move

Pricey: The five most costly places to buy a home as a first time buyer, according to Compare My Move

With average annual salaries of £22,258 and average property prices at £122,375, buyers in Hartlepool will need about £18,356 for a 15 per cent deposit, while average monthly mortgage repayments come in at the £384 mark.

Meanwhile, St Helens, again in the north of England, has made it into third place in the first time buyer affordability hotspot rankings, with a deposit to income ratio of 0.86. 

A typical home in the area costs around £140,076, while the average deposit required at 15 per cent is just over £21,000. Average annual pay packets in the area stand at £24,644.

Bradford, Barnsley, Gateshead, Stockton-on-Tees, Blackpool, Sunderland and Blackburn are other areas which give first time buyers a solid chance to get on the property ladder and have made it into Compare My Move’s top 10 list.

Top spot: Birkenhead near Liverpool came on on time in the first time buyer affordability stakes

Top spot: Birkenhead near Liverpool came on on time in the first time buyer affordability stakes

Top spot: Birkenhead near Liverpool came on on time in the first time buyer affordability stakes

Second place: Hartlepool came out in second place in the latest first timer rankings

Second place: Hartlepool came out in second place in the latest first timer rankings

Second place: Hartlepool came out in second place in the latest first timer rankings

While there are pockets of affordable options scattered across the country, most are situated in the north. 

Further down south, many first time buyers face a deluge of hefty deposit requirements, sky-high asking prices and lofty monthly mortgage repayment costs.

According to the research by Compare My Move, the town of Guildford in Surrey has the worst deposit to income ratio out of anywhere in the country.

The average property price in Guildford reportedly stands at £561,267, and with a 15 per cent deposit, buyers will need to stump up around £84,000, according to the findings.

The tourist hotspot of Bath came out second worst in the affordability rankings, while Woking, Oxford and London also scored poorly.

In London, average monthly mortgage repayments can end up being well over £1,900 and a buyer could find themselves having to fork out a whopping £90,000 just for just a 15 per cent deposit.

Stamp duty at zero for 90% of buyers 

Earlier this year, Chancellor Rishi Sunak wielded the axe to one of the nation’s most hated taxes as he slashed stamp duty to zero for almost 90 per cent of homebuyers.

Sunak raised the threshold at which stamp duty kicks in to £500,000 to help people move home, save them up to £15,000 in tax, and boost the economy in the coronavirus recovery.

In a stamp duty holiday for England and Northern Ireland that will last until 31 March 2021, buyers now pay no tax whatsoever up to £500,000.

The stamp duty holiday mimics the relief for first-time buyers, who previously paid no stamp duty up to £300,000. 

The big question, of course, is whether property prices will fall back as job losses bite, however, many aspiring first-time buyers are still keen as low mortgage rates mean that owning a home can be cheaper on a monthly basis than renting. 

Watch out for other costs 

As ever, first time buyers also need to be aware that other than a deposit and monthly mortgage repayments, a string of other fees, charges and costs will be incurred as part of the process of moving into a new home.

For a start, mortgage deals can carry a range of fees and some of the lowest rates will carry big arrangement fees of £1,000 or more. 

Although these can generally be added to the mortgage on completion rather than be paid upfront it is important to factor them in when deciding on the best deal.  

Solicitor fees, survey costs, removal costs, buildings insurance charges and renovation and decorating costs all need to be taken into account before first time buyers take the plunge and snap up a home.  

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