New data published by consumer champion, Which Money, for Cheshire West and Chester shows the average spend for first-time buyers is a whopping £217,830.
Those looking to put down a standard 10 per cent cash deposit will need to save £21,783 before they even get started.
At an annual interest rate of 5.34 per cent – decent, by today’s standards – such a buyer would face repayments of £1,184 every month, if they borrow over 25 years.
If they are wise and stick to the ‘28 per cent of your gross salary’ rule of thumb, a household needs to be pulling in £50,000 before saying goodbye to renting.
While this is in reach of working couples, with the average salary for the borough at a little more than £30,000, a traditional 25-year mortgage is well beyond the means of most single folk, whatever their age.
Nic Williams is a mortgage broker based on High Street in Northwich, whose company, Mortgage Solutions Ltd, specialises in helping first-time buyers secure their first home.
He says the Which purchase price is on the high side for Northwich and Winsford, with his first-time buyers typically spending between £150,000 – £200,000.
“That should get you a three-bedroom semi in Northwich,” he said.
“The £217,000 figure probably pulls in some pretty desirable villages, as well as Chester city centre,” he said.
“A 25-year mortgage for first-time buyers is pretty much a thing of the past.
“Most are opting for 35 and even 40-year mortgages, if they’re young enough. You’ve got to have finished paying them by the time you’re 70.
“It can bring the repayments down a lot. They had to be introduced as wages haven’t been going up enough to beat house prices.
“And if first-time buyers go for 35 years, they can actually borrow more because the affordability criteria isn’t a straightforward multiple of income.
“It also takes into account income, age, dependents, and outgoings.
“And if you opt for a five-year fixed rate, lenders will also let you borrow more as a reward for committing yourself.”
For those first-time buyers struggling to save for a 10 per cent deposit, Nic has some good news.
“The chances of getting a mortgage deal with a five per cent deposit are pretty good at the moment,” he added.
“Some lenders specialise in them, and can offer a free survey, as well as lender and product fee waivers.
“The rates tend to be around five-and-a-bit per cent, and can include up to £1,000 cashback towards solicitors costs.
“So, at today’s rate, £217,000 over 35 years with a five percent deposit could work out at around £973 a month.
“For those worried about committing to a 35-year mortgage, one thing to note is terms can be reviewed every time your fixed-rate period ends.
“If you’re earning more as you get older, it’s possible to reduce the term.”
