With rental costs rising consistently, you may be contemplating whether to apply for a mortgage. Even if you’re unsure, it’s worth exploring your options.

If you’re a prospective first-time buyer unsure whether to commit to taking on a mortgage, you may be motivated to get onto the property ladder by news of rising rental costs.

According to Rightmove, rental costs outside of London recently hit their highest annual rate in 16 years. The property website says that rents have increased by 19% since the pandemic started. In London, rents have also climbed, with annual growth now at 15.8% in the capital, according to Rightmove. Zoopla says that the average household renting in London pays £1698 per month.

Rightmove’s Rental Price Tracker report for the first quarter of 2022 revealed a quarterly increase in asking rent nationally of 1.8% and an annual increase of 10.8%.

Consistent rising rental costs

It seems that rising rental costs have been a consistent trend. Earlier this year, the Office for National Statistics revealed that private rents in the UK were increasing at their fastest rate in five years. It said that East Midlands had seen the biggest increase in average rental prices, with tenants paying 3.6% more than a year ago.

A recent Zoopla UK Rental Market report showed an 11% annual rental rise since the first quarter of 2021. On average, a typical UK household pays £995 per month in rent. The Zoopla report also found that a single earner pays an average of 37% of their salary on rent. Sharers pay an average of 18.5%.

There’s clearly still high demand for rental properties. Tim Bannister, director of property science at Rightmove, says there’s not enough available homes to meet the current demand.

‘Last year we saw exceptional numbers of tenants looking to move, and this year we have seen no let-up in this trend,’ he concludes.

High demand for rental properties

In December 2021, there were 71% fewer homes available in London’s rental market, according to figures from Propertymark, the professional body for the property sector.

If you are currently renting and struggling to cover your costs, you might be able to explore moving to a cheaper area, especially if you have the flexibility to work from home.

Another option is to look into buying your own property. You may feel this is an unpredictable time to buy with rising inflation and the base rate going up. However, there are still some competitive mortgage deals on offer, and borrowing remains relatively cheap compared to historical levels, even with recent increases.

Tips for first-time buyers

If you’d like to buy your first property, here’s some key things to think about:

• Get your paperwork ready. Knowing exactly what paperwork you need to apply for a mortgage can help you prepare.

• Know exactly what you’re earning and spending each month – especially if you’re self-employed, as your income may vary. Working out your average earnings each month is a good idea.

• Make sure you’re on the electoral register.

• Seek expert advice from an experienced mortgage broker who will explain all of your options and give you a clear picture of where you stand.

You can find more top tips on buying your first home by downloading our free first-time buyer’s guide.

More Information

Even if you think you might be unable to afford a property, you could be wrong. It’s always worth a conversation. Feel free to contact us for mortgage advice.

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