thousands of uk ftbs could be trapped in their homes
News Posted On: 17 November 2011
A new report from HSBC has pointed out that up to 360,000 of 2007's first time buyers could be trapped in their homes due to falling property prices. It is estimated prices of their homes could have fallen by up to 7%, eroding much of the equity. Those who haven't managed to save could find it impossible to move, as even though capital repayments would have paid off some of the mortgage, the equity would be almost the same as when they first started.
Research shows that most second time buyers need £27,000 to cover the cost of selling their home. Costs include a 10% minimum deposit and stamp duty, which could be as much as 3% for a home in the south of England.
In the past first-time buyers could always rely on rising home prices to fund their next step up the property ladder, but nowadays they need to plan to pay down their mortgage or to save in order to fund their next move. One way they can do it is to overpay on their mortgage, increasing the equity and amount of deposit available for a bigger home.
First-time buyers in Northern Ireland are worst off, as property prices have fallen by up to 42% since 2007, and many are now in negative equity. Although prices of typical first-time buyer properties in London have increased by around 1.7%, this group is still estimated to face a shortfall of £2,000, considering the high price of an average London home.
View Property for sale in England
Written by Les Calvert
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