First Time Buyers find alternative investments routes to climb up the UK property ladder

With the ever increasing UK property prices and interest rates, first time buyers are now turning to the overseas market to build up collateral.

Mortgage companies and property developers are now offering products such as extended mortgage terms, increased salary multiples and shared ownership in a bid to entice the first time buyers market in the UK.

This is all very attractive and may help people on their way but what price do they pay for being tied in to such schemes? The prospect of less disposable income, an increase in overall interest, higher legal fees and taxes along with the constraints of sharing a home with a housing developer is not greatly appealing.

Abbey National has reported that 17 million residents are unable to purchase in the UK with 6.9% unable to raise a deposit and in a report by Hiscox, over 24% of 18-24 year olds would consider investing overseas. In response to this new awareness, high street lenders are now offering first time buyers a mortgage to purchase overseas. These new products then place the ‘household name’ lenders in a very strong position against the international banks.

An article in ‘A Place in the Sun’ detailed a prospective first time buyer, who had purchased an apartment in Brazil, in a bid to raise capital for a home in the UK. The rental income proved to cover the mortgage repayments but more importantly the property valuation increased by 15% within a year. In the same article Simon Conn of CFS said that “it’s relatively easy for young people to buy abroad, the eligibility criteria is currently the same as those buying a second home abroad. Affordability can be in their favour as they don’t have existing mortgage commitments”