There is a significant spending and savings problem for would-be home buyers.
Someone smart coined a term for people who have given up on their dream of owning a home – "Guppies".
It's helpful to see a new generation of savings, budgeting and other money management apps come to the market that is impacting apathy in younger generations, but still very few solutions that have made a lasting improvement to one's chances of buying a home (except maybe Klink - www.klink-app.com - although they're still starting up).
Great write up on the UK home buying process - which can serve as a reference point to many starting their home buying journey, considering it, and beyond.
I'm currently going through a re-mortgage and the amount of nuances to be aware of can be baffling at times. For instance, the best two year fixed rate on the market doesn't allow you to make overpayments without a substantial penalty, whereas the rate a tiny bit allows a lot more flexibility when it comes to overpayments! Also it's frustrating to find that in an interest rates environment where we expect rates to go down, tracker mortgages are more expensive than fixed rate mortgages, and offset mortgages are more expensive still. So essentially if you want more certainty you need to lock in a rate which you know will be far from the best within 6-12 months. That said, this has likely always been the case in the mortgage market.
One interesting article on this topic that I recently read spoke about the wealth disparity within the millennial cohort.
"Bee Boileau and David Sturrock at the Institute for Fiscal Studies found that more than a third of young UK homeowners received help from family. Even among those getting assistance there are huge disparities, with the most fortunate 10th each receiving £170,000, compared with the average gift of £25,000."
£170k is a huge amount of money in any part of the world. So to a large extent the UK property market has been sustained by paying forward future inheritance. Well worth reading the full piece here: https://on.ft.com/3U8qVuz
Thanks Matt and a couple of great supplemental points. I think a deed of gift is the most tax efficient way of gift a lump sum so long as the property will be a home for at least 7 years but as you said, there is even a disparity there because if you want to buy in London you probably need at least 100k deposit and the assistance amount is 25k. The less fortunate have no chance of getting on the ladder in London.
An excellent read on an utterly broken process, with massive market opportunity. Kudos to you for the great write up and to the fintechs diving in and working to fix it! Bring on the Diagram!
There is a significant spending and savings problem for would-be home buyers.
Someone smart coined a term for people who have given up on their dream of owning a home – "Guppies".
It's helpful to see a new generation of savings, budgeting and other money management apps come to the market that is impacting apathy in younger generations, but still very few solutions that have made a lasting improvement to one's chances of buying a home (except maybe Klink - www.klink-app.com - although they're still starting up).
Great write up on the UK home buying process - which can serve as a reference point to many starting their home buying journey, considering it, and beyond.
I'm currently going through a re-mortgage and the amount of nuances to be aware of can be baffling at times. For instance, the best two year fixed rate on the market doesn't allow you to make overpayments without a substantial penalty, whereas the rate a tiny bit allows a lot more flexibility when it comes to overpayments! Also it's frustrating to find that in an interest rates environment where we expect rates to go down, tracker mortgages are more expensive than fixed rate mortgages, and offset mortgages are more expensive still. So essentially if you want more certainty you need to lock in a rate which you know will be far from the best within 6-12 months. That said, this has likely always been the case in the mortgage market.
One interesting article on this topic that I recently read spoke about the wealth disparity within the millennial cohort.
"Bee Boileau and David Sturrock at the Institute for Fiscal Studies found that more than a third of young UK homeowners received help from family. Even among those getting assistance there are huge disparities, with the most fortunate 10th each receiving £170,000, compared with the average gift of £25,000."
£170k is a huge amount of money in any part of the world. So to a large extent the UK property market has been sustained by paying forward future inheritance. Well worth reading the full piece here: https://on.ft.com/3U8qVuz
Thanks Matt and a couple of great supplemental points. I think a deed of gift is the most tax efficient way of gift a lump sum so long as the property will be a home for at least 7 years but as you said, there is even a disparity there because if you want to buy in London you probably need at least 100k deposit and the assistance amount is 25k. The less fortunate have no chance of getting on the ladder in London.
An excellent read on an utterly broken process, with massive market opportunity. Kudos to you for the great write up and to the fintechs diving in and working to fix it! Bring on the Diagram!
Thanks Deanna. I've been through it twice and felt the pain both times. The diagram is now in there :-)
Worth the wait!
And my Dad completed on his house yesterday. His first house move in 46 years.....