Purchasing a home is always a major decision, and for first-time buyers, it frequently represents their largest financial choice. A “starter” home may be something you’re thinking about if you’re seeking to purchase your first house. Here, we’ll define a starter home and examine the benefits and drawbacks of purchasing one.
What qualifies as a starter house?
A starter home is, to put it simply, the first house you purchase after moving up the housing ladder. But according to leading independent estate agents in Buckingham starter homes are typically thought of as stepping stones to “forever” homes and aren’t intended to be owned for a long time.
Starter residences might include:
- A small home
- A studio or apartment
What should the price of a starter home be?
A first-time buyer should be able to afford a starter home. The amount you may borrow through a mortgage and the size of your down payment, however, will determine whether or not you can afford to buy one. The cost of real estate for first-time buyers varies based on where you live.
Should I wait to buy a starter home?
It might be difficult to decide whether to purchase a beginning home right away or wait, save more money for a down payment, and possibly purchase a “forever” home. Each option has advantages and disadvantages. Here are the top five factors you should think about before buying a starter house.
Starter home for your lifestyle:
Starter homes are typically modest and not adaptable to changes in your way of life. Think about if the house you’re considering has enough space for you in the short to medium term before making a purchase. Additionally, think about the location of the property and how it will benefit you in the long run:
- Are you likely to change jobs in the future, necessitating a sale of your home?
- If you find someone and decide to move in together, will the property work for you?
Plan your exit strategy in advance:
You’ll need to consider your next step up the ladder and what needs to occur for you to take it because starter houses aren’t meant to be owned forever. Before making your next purchase, consider how long you intend to stay in your starting house and how much room it has for value appreciation. Consider what a potential buyer of your house would desire from it and its location by putting yourself in their position. When the time comes to sell, having a starter home close to convenient transportation options, even if you don’t use them, may increase the value of your home to a young professional who commutes into the city.
Moving is expensive:
Every time you move, you’ll have to account for extra expenses like moving, potential stamp duty, legal fees, and much more. Therefore, in theory, you should spend less money if you move less frequently. That may indicate that you would be better off waiting to purchase a more substantial “forever” home rather than moving up the property ladder to a starter home. But your upfront and ongoing costs will be higher because you’ll probably need to save a larger down payment and you might need to borrow more from a mortgage.
Then consider:
- The price gap between a typical starter home and a larger property in your neighbourhood.
- How simple and how long it would be for you to save a larger deposit.
- The significance of location to your lifestyle and commute to work.
The market:
Is there a high demand for starter homes in the neighbourhood where you want to purchase one? If so, you could be better off purchasing one since it will likely appreciate more quickly than a larger home and will allow you to move on to the next level of the ladder sooner.
Your maintenance strategy:
Starter homes are often smaller, making maintenance easier. If you’ve lived in a rental property before, you’re probably used to the landlord taking care of significant difficulties. However, as the homeowner, you are now accountable for them. You might do better buying a starter house where there may be less maintenance to worry about if you’re a true first-time buyer and are concerned about property maintenance.
What is the first homes scheme?
With the help of the government’s new First Homes scheme, first-time homebuyers in England who otherwise couldn’t afford one would be able to purchase a home at a reduced price. More specifically, under this programme, first-time purchasers will be able to buy a brand-new house in their neighbourhood for 30% less than the going rate. This translates to savings of about £100,000 for the typical new-build residence in England. One of the largest financial accomplishments and challenges in life is purchasing your first home.
Eligibility for the First Homes scheme:
To be eligible for this programme, you must be a first-time buyer. Additionally, you must purchase a home in your neighbourhood with the purpose of residing there (i.e. it cannot be a holiday home or buy-to-let). The programme will be accessible to persons in all occupations, but some will be given preference. These include military personnel, veterans, and vital employees including nurses, police officers, firefighters, and teachers. The government has also established some pricing limitations in order to make sure the programme supports those who are most in need.
