How to Get on the Property Ladder with No Money

GUEST POST | If you’re on a low income, a zero hours contract or minimum wage, you might feel you’ll be laughed out of the bank if you go in there asking for a mortgage. So, how can you get on the property ladder with no money? 


Average House Price in The UK
With the average house price in the UK being £264,000 and the average salary being £31,285, how is anyone supposed to get on the property ladder, never mind those on a low income (as an illustration, someone working 40 hours a week on minimum wage would be on a salary of £18,532.80)? All is not lost though. You might think you’re priced out of the housing market but there are ways to get on the property ladder with a low income and we’ll have a look at some of these ways below.
Look For Property in a Cheaper Area
If you’ve got your heart set on a townhouse in Notting Hill, setting your sights a bit lower will help you get on the property ladder. When I say ‘a bit’, I mean stop coveting those £6million penthouses on Rightmove and have a browse on estate agents in Essex websites instead. You’ll get far more for your money in slightly less-salubrious areas such as Barking, Basildon or Dagenham and, if you work from home, you can live wherever you like (and can afford), so you won’t be spending thousands a year on your commute. 

Save a Bigger Deposit
Saving a bigger deposit is easier said than done, no one’s going to disagree with that. A rightful complaint from would-be property buyers is that they can easily afford a mortgage, as proved each month when they pay rent that’s more than their mortgage payment each month would be. If they didn’t have to pay so much in rent, they could save up for a bigger deposit with which to buy a house. It’s a Catch-22 situation for sure. There are ways to save though, even if you think you’re already financially stretched to your limit. 

Cut Down On Essentials and Non-Luxuries
Go through your bank statements and online subscriptions and see what you can cut out. That daily coffee shop coffee? Get a travel mug and take your own coffee on your commute. Do you really need all your streaming services? There must be some you can cut out or downgrade to a cheaper plan. Do you have a gym membership but can’t actually remember where the gym is? Scroll through the apps on your phone. Are there apps you’re paying for but never use? If there’s stuff you really have to buy, here are some tips to help you save money online

Put The Money in a Savings Account
When you’ve gone through your daily/weekly/monthly/yearly outgoings and cut out those services and non-essentials you can live without, put the money you would have spent into a savings accountThis isn’t because you’ll make more money in interest (you get approximately bugger-all in interest these days) but because if you leave it in your bank account, it’ll get spent somehow. Put it in an account that doesn’t give you a bank card and you’ll soon see the money for a deposit build up.


Pay Your Debts Off
I know paying more money out seems to contradict the advice above about cutting down on your spending, but one thing a mortgage lender looks at is how many loans and debts a potential borrower already has. Paying off any debts such as a student loan (okay, that’s possibly a bit unreasonable), personal loans and credit cards will make you look better in a lender’s eyes. 

Improve Your Credit Score
A low credit score isn’t going to do you any favours when it comes to getting a mortgage. If you think your credit score is going against you, you can check it for free at websites such as ExperianIf your credit rating isn’t great, make sure you pay off any loans regularly and don’t miss any payments. On top of that, pay more than the minimum amount required to really improve your rating. 

‘But I don’t even have a credit card. Why is my rating so low?’ is a common question. The reason your credit rating is low when you don’t even have a credit card is because there’s not actually anything to rank you on. No one will know if you’re good at paying back a debt if you’ve never had one. Yet another of those pesky Catch-22 situations. 

Yet again, I’m going to contradict myself and say, if you’ve never had a credit card and your credit score is low - get a credit card. This sounds a crazy idea but getting a credit card and paying off the balance in full each month will improve your credit score. I’m not suggesting you get a Platinum Amex and max it out on shoes, handbags or cars each month, but buy your groceries and other regular essentials on your credit card and just remember to pay it off in full each month. You’ll be no worse off but your credit rating will improve. 

The above advice isn’t a magic bullet for getting on the property ladder with no money, but a bit of cutting back, compromising and improving your credit rating will get you further towards your dreams of being a homeowner. 

Are you on the property ladder? What are your tips and advice for first-time buyers?

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