Gen Z and Gen Alpha: Five Tips for First Time Homebuyers from Millennials
When it comes to tips for first time home buyers navigating the process of purchasing a property, finding advice that’s realistic and mindful of the challenges faced isn’t always straightforward. Especially when that advice concerns the current and future generations. While Gen Alpha – those born between 2010 and the present – aren’t yet old enough to buy a home, the older members of Gen Z, are. According to the National Centre for Social Research, 81% of Gen Z would buy a home if they could and 78% expect house prices in their area to increase further in the next 10 years. In short, many find the prospect of buying a home unreachable.
However, there are ways to do it. We’ve scoured internet forums for first time buyer advice for Gen Z and Gen Alpha from Millennials who have achieved their homeownership dreams. Here are some practical tips that came up the most:
1. Explore savings accounts to help you build a deposit
If you dream of buying a home in the future, forward planning is crucial. With the average deposit needed to buy a home on the open market covering 20% of the value, simply saving up the amount needed can be one of the biggest hurdles to overcome. Once you’ve worked out a ballpark figure of how much you’ll need to save, explore the best places to put your savings. If you plan on saving for a while, consider a savings account that pays more interest. For instance, a Lifetime ISA. Available to people aged 18 to 39, this account can be used to buy your first home. You can put in up to £4,000 a year and the government will add a 25% bonus on top – that’s an extra £1,000 up for grabs.
2. Build your credit score
One aspect many Millennials reported they didn’t realise would be so important when buying their first home was their credit score. Paying with credit can help you build a good rating, which will show lenders you can reliably pay back loans – such as a mortgage when the time comes. Like saving, this is part of the forward planning you can do to get yourself in a favourable financial position for purchasing a property.
3. Understand what you can afford
Several Millennials said that simply getting to grips with their finances through monitoring income and outgoings helped them determine what they could afford to buy. This enabled them to fine-tune their search when looking at homes for sale. If you’re unsure what you can afford, try our mortgage affordability calculator to find out how much you could borrow.
4. Speak to a financial advisor
Unsure where to start with finances and mortgages? Millennials recommend speaking to an expert who understands the nuances of the market. They can advise you about getting your finances in shape, so you’ll likely be approved for a mortgage by lenders when the time comes. They can also help you get the best mortgage product and interest rate for your circumstances.
5. Explore Shared Ownership opportunities in your area
For some Millennials, purchasing a property on the open market has been unaffordable, so they’ve turned to alternative home-buying routes like Shared Ownership instead. Shared Ownership is a government-backed home– buying scheme enabling first time buyers, and those who have previously owned a home, to purchase a share in a new-build or resale home.
The buyer pays a mortgage on the share they own and subsidised rent to a housing association on the remainder. As you only need a mortgage for the share you are purchasing, the amount of money required for a deposit is usually lower when compared to the amount that would be required when purchasing outright.
In the year 2022-2023, it’s estimated that 77% of Shared Ownership home purchases were first time buyers, proving just how popular the scheme is for those wanting to buy their own place.
At Share to Buy, we make your choice easier with a selection of new-build homes across England, available through alternative homeownership schemes such as Shared Ownership. Get your home-buying journey underway using our property portal.
