Expert explains why first-time buyers are desperate to buy homes in Sheffield

Sheffield is one of the most affordable locations in England for first-time buyers according to new figures released in a study.

Compiled by online mortgage broker Mojo Mortgages, the first Homes scheme affordability index looked at various factors affecting home affordability in 2021 including house prices, average annual salary, and monthly take-home pay to work out where in England was most and least affordable.

Based on the average monthly mortgage payment as a percentage of income, Sheffield was the 20th most affordable location in England for first-time buyers, with the average monthly mortgage repayment taking up 22.76% of a couple’s take-home pay.

This is based on an average property price in the city of £216,864 and an average annual salary of £26,509.

Sheffield is one of the most affordable locations in England for first-time buyers.  (Photo by Matt Cardy/Getty Images)

The figures have been released following the launch of the government’s First Homes scheme, which is designed to help first-time buyers and key workers onto the property ladder in their local areas that might otherwise have had to move to another city to afford their first home.

First Home properties will be priced at a discount of at least 30% of the original market value to allow more affordable deposits and mortgages with prices capped at a maximum of £250,000 (£420,000 in Greater London).

However, it’s important to note that this discount will apply to the lifetime of the property, meaning that the same percentage discount will apply when the home is resold in the future.

Cassie Stephenson, director of mortgages at Mojo Mortgages, said: “While of course, it’s important to remember the 30%+ discount will apply throughout the lifetime of the property and will apply when you eventually sell for the first time, a First Homes scheme property is still very much worth considering regardless of location as an option for first-time buyers looking to get onto the property ladder.

“The savings available - particularly allowing first-time buyers access to higher LTV mortgages through reduced deposits - could also mean better access to lower interest rates and improved overall savings across the lifetime of a mortgage. Plus, of course, purchasing a home is a significant long term investment towards your financial future as opposed to lining a landlord’s pocket.

“We’re excited to see how this new scheme develops over the coming months as new properties and developments continue to crop up across England.”

Regardless of location, the First Homes scheme could make a significant difference to a first-time buyer's monthly outgoings once on the property ladder in terms of mortgage payments as well as saving for that all-important deposit.

However, before considering your mortgage options, it is important to establish how potential repayments fit into your monthly budget as Nisha Vaidya, mortgage expert at money.co.uk, explains: “A home is one of the largest purchases you’ll make, and it can be difficult to understand how much you can afford.

There are many factors, like your salary, regular outgoings, and a debt-to-income ratio that will impact whether a home is within your reach.

“A good rule of thumb is to allocate no more than 35% of your gross income to your monthly mortgage repayments. Any more than this, and you could become 'house poor', where you own a house but lack the funds to do other important things such as saving money or going on holiday.”

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