How To Get On The Property Ladder in 2023

The property ladder can be tricky at the best of times, but in the recent years it has felt, for many, almost impossible. First, there's all the jargon, that, unless you work in the industry, might as well be an entirely different language. Then, there's the fast-paced nature of it all, with so many different parties pulling you this way, and that, encouraging fast decisions, immediate action and general pressure. And thirdly, though the list could go on-and-on, there's the small matter of actually having the money to buy a house or flat, from saving for a deposit to ensuring you can get the correct mortgage (especially now mortgage interest rates are at an all-time high).

In short, though owning a home might feel like your next logical step (ah, walls we can actually paint any colour we like, just imagine that?!), getting it, is a different matter entirely. It's a major financial challenge in the modern world and can leave you feeling deflated and dejected.

However, we're not ones to simply give up, and so we called upon sisters Margot & Alexia, who happen to also be the founders of Your Juno, an app designed with the sole aim of giving women and non-binary people the financial knowledge and confidence to build their wealth. “We decided to build a financial empowerment platform aimed at providing the best education in a fun way - a bit like the Duolingo of Money,” the sisters say.

Below, the clued-up pair share with us their five top tips on how to get on that property ladder — finally! Plus, the sisters offer some timely tips for getting on the property ladder now in the midst of the cost of living crisis.

5 steps for getting on the property ladder

First off, make sure that you do want to buy and not rent a place. There are pros and cons to both - it’s important to consider your future ambitions, financial goals and lifestyle preferences. If you’ve decided on buying, break down your wants and needs into the following three categories:

Must Haves - non-negotiables: For example, your maximum price, the number of bedrooms, connection to transport or a school

Like To Haves - features you would like to have: For example, a garden, proximity to a cute cafe

Nice To Haves - nice to have but not essential: For example, high ceilings

Then, check out Zoopla to get a sense of the budget you will need to buy the properties on your radar. It is important to keep in mind all the extra costs that can add up, for instance: stamp duty, solicitor fees, valuation fees. Stamp duty is the biggest extra cost, you won’t pay it on the first £500k if you’re a first-time buyer, and then it increases gradually. Consider all this together and set a range of your financial goalsgoal. Now you know the destination.

Mortgages are ‘secured loans’ you get from a bank or lender to buy a property. As the borrower, you promise collateral (in this case your home) to the lender in the event that you stop making payments. Mortgages can be fixed-rate or variable-rate. This refers to the repayment strategy.
Fixed-rate mortgages allow you to know exactly how much your monthly repayments will be for the duration of your fixed term - regardless of what happens to interest rates in the market. This can be a good or bad thing: it gives you the security of knowing how much you need to pay per month, however, if interest rates fall, you cannot take advantage of a cheaper deal.

Variable-rate mortgages include rate fluctuations - they can be spontaneous and unpredictable - based on changes in economy-wide interest rates (also known as the base rate). These can be harder to budget for but, if you have some spare cash, a variable rate is a gamble that could be cheaper in the long-run.

When a lender is looking at your eligibility they will usually consider:

• The size of the loan you want to take out
• How much you have saved as a deposit
• The type of property you want to buy
• Your employment status
• Your credit rating
• Your affordability

The most important factor that every lender will look at: your income. Typically, the most you can usually borrow for a mortgage is 4.5 times your gross income. So if you earn £25,000 per year, you could expect to be able to borrow up to £112,500.

LTV is your loan-to-value: the ratio of what you want to borrow as a mortgage against how much you pay as a deposit.

It’s worth noting, that while one mortgage lender may reject you, another lender who judges you from different criteria may not. You might have to go on a few dates before you find ‘the one’!
Your credit score is key when applying for a mortgage. Make sure to check yours on sites like Experian. You can improve your credit score by making bill payments on time, getting on the electoral roll, or getting a credit card.

Typically, the deposit for a first-time buyer will be between 5% and 10% of the purchase price, with the mortgage making up the remaining of the cost. The higher the deposit, the less money you will need to borrow from a lender. Which will usually give you access to better interest rates.
Saving up for a deposit could take many different forms:

• Budgeting
• Cutting costs by negotiating bills and rent
• Starting a side hustle
• Negotiating a salary raise
• Bank of mum and dad Nearly half of first-time buyers get their parents' help when it comes to a house deposit. This amount is not taxed if it is a gift.

LISA:

You can use a lifetime ISA, to buy your first home (for a property costing £450,000 or less) or to save for retirement. You can put in up to £4,000 each year, until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 a year (that’s free cash).

Shared ownership:

Shared ownership is where you buy a share of property and pay rent to your landlord on the rest. In the future, you can even buy more shares in your home: this is known as 'staircasing'.
Rent on shared ownership tends to be lower than the rate charged on the market but you also have to pay your mortgage, service charge fees and maintenance costs.It can be a good way of getting onto the property ladder if you can’t afford a full property yet.

The Juno app gives you the best possible tips on buying your first home. Download the app here to dive deeper into all things property with your Juno - your financial wingwoman.

Getting on the property ladder in 2023

It has always been tricky to get a foot on the property ladder — but the conditions in 2023 have made saving for a mortgage almost impossible for many young people.

“2023 has been a rollercoaster, particularly for young women looking to get a foothold in the property market,” Margot tells us. “With a combination of rocketing inflation, stagnant wages, and fluctuating interest rates, navigating the path to homeownership has become increasingly complicated.”

Plus, she adds, in the current cost of living crisis, young women are disproportionately affected and often find themselves struggling to save adequately to reach their home ownership goals.

3 tips for saving during the cost of living crisis

“The cost of living crisis has forced many people to reassess their budgets, with many young people cutting out saving altogether,” Margot says. “But see if you can keep making small, consistent contributions to your deposit, which can add up to a substantial amount over time, especially if invested wisely.”

Factor in rising mortgage rates so you can make a realistic budget. “Aspiring homeowners are seeing higher mortgage rates due to the Bank of England (BoE) having increased its base rate multiple times,” she says. “This makes borrowing more expensive, and for first-time homebuyers, this is another layer of complexity. If you're still considering a mortgage, be sure to factor this into your budgeting and consult various brokers for the best available rates.”

There is one silver lining — house prices are starting to go down. “While house prices have taken a slight dip for four consecutive months, it’s essential to keep expectations realistic,” says Margot. “These prices are still significantly high, a residual effect of years of low-interest rates post the 2008 financial crisis. So, don’t expect a fire-sale, but a dip is always better than a spike.”

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