THE most affordable areas for first-time buyers to bag their first home have been revealed. Aberdeen has been crowned the most affordable area to buy a property in the whole of the UK for wanna-be homeowners. This is based on the average value of a one or two bed home in the Scottish city, which is £119,350, according to new figures from Zoopla. And it means that buyers in the area pay just £510 in monthly mortgage payments, which is just 16% of the area's average £3,280 monthly salary.
Liverpool was ranked the second cheapest region to buy a home with the average one or two bed property costing £130,800. Mortgage payments on this home would come in at £540 a month and would be 3.7% of the average £2,980 monthly salary. Coming in third is Glasgow, where the average first-time buyer property is £152,270 and average monthly mortgage payments are £650. That means monthly payments are just 4.1% of the average £3,100 salary in the area.
It is widely recommended that potential buyers spend no more than 28% of their monthly earnings on mortgage repayments to avoid being in too much debt. Other areas flagged as first-time buyer hotspots include Sheffield where homes cost £156,990. Newcastle was also deemed attractive for wanna-be buyers, with the average one or two bed property costing £150,360. Fresh data from Zoopla showed the average house price in the UK hit £267,700 in December 2024, which is up around £200 on the prior month.
Rising house prices have piled pressure on first-time buyers who are also dealing with a mixture of wage stagnation and hikes to the cost of daily living. Meanwhile, stamp duty relief available to first-time buyers since 2022 will end in April 2025. As a result, a first-time buyer purchasing a property valued at £425,000 will incur a stamp duty charge of £6,250. A glimmer of hope can be found in the Monetary Policy Committee (MPC), the BoE's rate-setters cutting the base rate from 4.75% to 4.5% last week.
The base rate is used by lenders to determine the interest rates offered to customers on savings and borrowing costs. A base rate cut can mean that mortgage rates are lowered, which is good news for homeowners. Just today, Santander launched a two-year and five-year fix with a rate of just 3.99%. It's the first sub-4% mortgage on the market since November last year. A number of lenders have launched mortgages which help wanna-be buyers who are struggling to get a deposit.
For example, TSB launched a new "5&5" concessionary mortgage option for its customers. Under the lender's new scheme, landlords would offer their tenants a 5% discount on the property's market value in exchange for putting down a minimum of 5% deposit. Concessionary mortgages allow wannabe homeowners to bag a property for less than the market value. They are usually used by landlords selling a house to their tenants, or someone selling a property to a relative.
A number of lenders offer some variation of this mortgage type including Barclays and Natwest. Another option is a Lifetime ISA (LISA) was launched in April 2017 and is a savings product which is designed to help people save for either a first home or retirement. The account is tax-free and anyone aged between 18-39 can open one. You can save up to £4,000 a year and the government will then add a 25% bonus on top.
If you save the maximum amount between the ages of 18 and 50 you could get as much as £32,000 for free. You'll also earn tax-free interest on your savings pot, including the added extra from the government. If you choose to buy a property it must cost less than £450,000 and you must buy it at least 12 months after you make your first payment into the Lifetime Isa. There are strict withdrawal rules surrounding a LISA that prospective users should be aware of.
For example, you can only make an authorised withdrawal from your LISA to purchase a house or if you are terminally ill. Anyone who’s opened a LISA for retirement will also be able to access the cash without penalty when they turn 60. If you withdraw for any other reason you are slapped with a 25% fine, which is known as an "unauthorised withdrawal" penalty. You can read all about the scheme by clicking the link here.
