Last-time buyers are over-65s looking to buy a new house to enjoy retirement in. Of course, due to the differences in age, circumstance and needs, buying your last house is very different to buying your first. Let’s explore some of the differences between the two, as well as the one factor they have in common.
1. Financing the property
Finding the deposit for a home is arguably the most difficult part of buying your first home. In these circumstances, most first-time buyers will be looking to make withdrawals from the bank of mum and dad, saving their own money, or relying on money left for them by loved ones. However, older buyers generally sell to buy and while some retirees do turn to mortgages, it is extremely rare.
According to Legal & General, after buying the new home, last-time buyers are more inclined to spend leftover capital on:
- Home and garden improvements
- Paying off mortgage debt
- Consolidating existing and unsecured debts
- Funding a holiday
- Giving financial gifts to relatives
- Helping younger generations to buy their first home
2. Finding the right home
One of the most-cited reasons for moving into a new home in retirement is the need for accessibility, or a home which is easier to maintain. According to the research, some of the most sought-after features for last-time buyers are:
- Single-storey property with no stairs
- Fewer rooms
- Smaller gardens
- Purpose-built properties for retirement
However, it is likely that first-time buyers are looking for properties that they can grow into, or which they may sell in order to upsize during the next phase of life.
3. Mortgage types
First-time buyers are likely to be accessing standard mortgages or looking into schemes which have been designed with first-time buyers in mind. These include:
- Help to Buy Equity Loans: This is a government-backed scheme which breaks the cost of buying a home into three parts; a 5% deposit, provided by the buyer(s), a 20% loan, which completes the deposit and must be repaid by the buyer, though it is interest-free for the first five years. Finally, the buyer must source a 75% mortgage.
- Low-deposit mortgages: Mortgages with a 5% deposit, or even 100% mortgages are available through some lenders. However, they usually require a guarantor to place a deposit into an account. This money is not used in the home buying process but is simply retained as security for the mortgage.
- Shared ownership: Some housing associations offer the ability to buy a share of a home and build up to full ownership over time. This often begins with a 25 to 75% share. The housing association retains ownership on the remainder of the property and rent is due on it, though the amount of rent payable will decrease in line with the housing association’s share of the property.
For last-time buyers, mortgages are rarely necessary, however, some may need short-term finance, such as a bridging loan, to cover expenses, complete a chain or buy the new house before the sale of the current property is complete.
4. Timing
The main thing which unites both first and last-time buyers is timing. Both would like to make the transition to their perfect home as soon as possible, and probably, with minimal stress or hassle.
For first-time buyers, this might be to take away the expense of renting and to be able to begin the next stage of life, whatever that involves. Meanwhile, last-time buyers may be struggling to maintain their current home or may need to relocate quickly due to accessibility issues.
Both groups can benefit from mortgage advice. And, luckily, that’s why we’re here.
The benefit of advice
Independent advice can give you a broader view of both your current situation and the options facing you. So, whether you’re a first-time buyer, or looking to buy the home you will stay in for the rest of your life (or even if they’re both the same thing for you), we’re happy to help you to make sure everything is in place to make the move as easy as possible.
For more information, please get in touch with us on 0800 612 8099.