The majority of people who have bought their first home are not saving to increase their buying power when they make their next step up the property ladder, according to new research from uSwitch.
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The majority of people who have bought their first home are not saving to increase their buying power when they make their next step up the property ladder, according to new research from uSwitch. Instead, more than six in ten people in their first home are relying on the growing equity stake in their property to fund their next deposit, and almost half (44%) of first-time home owners have no plans to save towards their next house move at all. But rising prices mean they could face a significant shortfall when they come to upgrade. Over the last ten years, prices for houses have increased 21%, rapidly outpacing flats, which have increased by just 15%, according to house price data from Zoopla. “Second steppers have been lulled into a false sense of security by rising house prices,” says Tashema Jackson, money expert at uSwitch. “In some parts of the country houses have far outstripped flats and so if you are looking to move up the property ladder you need to carefully plot your next steps.” Preston, Lancashire, has the biggest difference in price growth for homes and flats at 16.5%. Since 2006, house prices in the town rose by 8.5%, while the average price for a flat fell by 8%. Similarly, house prices in Colchester, Essex, increased by almost a quarter, while the value of a flat rose 13%. The trend isn’t universal though, and in many areas flat prices have grown faster than those for houses. In Aberdeen, for example, house prices have increased by a massive 47% - but they were still outstripped by 57% gains for flats. The research also found more than six in ten second time buyers haven’t made any savings to cover transactional costs when moving home, such as stamp duty, surveying costs, or removal fees, which typically total £12,000. “Whatever your situation, plan ahead to find out what you can afford and how much you need to save. Don’t just take the first mortgage offered to you – consult a range of providers to find the best deal for you as this will help prevent paying over the odds,” says Miss Jackson.
Source Moneywise http://ift.tt/1Uo9yAN
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