Buy-to-let
Common consensus is that first-time buyers are facing a tough time, but 49 per cent of second-time buyers say that the main obstacle to moving to a larger property is that they cant afford a bigger mortgage, according to Abbey.
Trading up to the next step on the property ladder is becoming so difficult that 42 per cent of homeowners say that they will stay put and extend instead. With almost half of people saying that they really need more space, it does seem like a logical option.
Paula Ickinger, Product Executive, Mortgages and loans, said: Almost half of the UK population own their home with a mortgage, and a further 23 per cent own their home outright.
If these homeowners do decide to stay out and extend this could create a bottleneck in the housing market for both new and existing property owners.”
Although extensions are a popular option, its not a viable alternative for everyone. One in three people want to move because they dont like the area they live in and 12 per cent would relocate to reduce the commute to work or be closer to family and friends.
Ickinger said: Generally speaking, people are getting on the property ladder later in life than they were ten or twenty years ago, and clearly house price inflation is an issue. Wage increases have not kept pace and therefore this has had a significant impact on existing homeowners ability to move up to a bigger property.
First-time buyers are getting older whilst they are also squeezing in careers and families before turning 40. They may be trying to take bigger steps up the ladder in a shorter period of time, but high house prices are preventing them from doing so.
According to the Council of Mortgage Lenders (CML), the difference in mortgage costs for first-time buyers and people moving home is quite significant, and perhaps more than borrowers anticipate.
In 2005, the average mortgage for a first-time buyer was £90,328, whilst the average mortgage for people moving house was £113,374, a difference of £23,046. In terms of monthly mortgage repayments, this could be at least £135 extra per month.
Ickinger added: Moving is a time of uncertainty and people need to ensure that their finances are in order.
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