Deserving, but deprived
The Married Women’s Property Act was introduced in the 1870s, meaning that women could finally legally own their earnings and inherit property in their own name – historically, both would have belonged to their husband. It would then, however, take more than 20 years before single women were entitled to inherit or own a home, and nearly a century before they would be able to take out a loan to buy their own property. Even then, a woman would have needed a male guarantor, whether she earned enough to qualify for a mortgage or not.
The mortgage-lending industry has fortunately made some progress since then, yet many women, even today, lack confidence in their ability to buy a home or to make sense of the house-buying process. The Aldermore study found that nearly two-thirds (64%) of women consider the latter problematic, compared with fewer than half (46%) of men.1
Indeed, both men and woman feel less than confident when it comes to dealing with mortgages and house buying. A survey by Trussle Mortgage Brokers suggested that 40% of people didn’t know what ‘completion’ meant and 37% didn’t understand the phrase ‘mortgage term’ – while 66% admitted they didn’t understand all of the terminology in their mortgage agreement.2
The persistent gender pay gap continues to be a blocker for many women too. When comparing male and female full-time workers, it stands at 8.9%. But when you consider full- and part-time workers, the disparity jumps to 17.3%.3
Given that a first home in the UK costs, on average, £231,4554, and a first time deposit around £46,1875, it’s therefore unsurprising that a woman needs more than 12 times her annual salary to be able to afford a home in England – compared with a little over eight times for a man6.
This is further complicated by the fact that many women continue to take on a disproportionate share of family duties, meaning they often have a tendency to work flexibly in a self-employed capacity or as freelancers, for fewer hours and therefore earn even less. It’s worth knowing that there are now around 1.7 million self-employed women in the UK7, while the number of freelance worker mothers has increased by 80% in the last decade.8 And many of these women might wrongly assume that they’re ineligible for a mortgage – or that the irregularity of their income might mean this is a write-off.
With all of these hurdles to overcome, it’s little wonder that some women feel doubtful about owning their own home. Luckily, help is, of course, at hand, including support from government schemes designed to help you save for your first property.
For example, on paying money into a Lifetime ISA, the government will reward you with a bonus worth 25% of what you pay in (up to a set limit each tax year). If you already have one, you can continue to save into a Help to Buy ISA and take advantage of government top-ups up to a limit of £12,000. (Please note that Help to Buy ISAs are no longer available, but if you opened one before 30th November 2019, you can keep saving into your account.)
It might also just be the moment to sit down and discuss whether or how the ‘Bank of Mum and Dad’ could help you. For example:
- Offsetting their savings against your mortgage – helping to reduce the amount of interest you pay, minimising the deposit required, or giving you access to preferential mortgage rates.
- Using their existing savings or property as extra mortgage security, while retaining ownership of their investments and savings.
- Jointly applying for a mortgage alongside you – thereby taking their income into account to help the mortgage become more manageable.
Terms and conditions would apply to each of the above, therefore please seek professional advice.
Last, but not least
Buying a home is one of the biggest decisions you’ll ever make in your life – for this reason, it’s critical to seek expert advice to ensure you have transparency at all stages of the process. A professional financial adviser can help you navigate the available schemes, explain the best ways to grow a deposit, or provide access to mortgages that are aligned with your personal finances. You’ll even be supported with the application process itself – helping to bust that confusing mortgage jargon.
Achieving your financial goals doesn’t have to be about building castles in the sky – it’s to do with maximising your money in the right way, which is where the Wellesley team of financial advisers are always happy to help. Get in touch today on 01444 244551 to make that initial step towards getting a firm footing on the first rung of the property ladder.
1 Aldermore, First Time Buyer Index, 2019
2 Trussle Mortgage Brokers, Trussle Mortgage Map of Knowledge, September 2019
3 ONS Gender Pay Gap in the UK: 2019
4,5 Halifax First Time Buyer Review, January 2020
6 Women’s Budget Group, A Home of Her Own, Housing and Women, July 2019
7 ONS, Trends in Self-employment in the UK 2019
8 The Association of Independent Professionals and the Self-Employed (IPSE), What makes a freelancer? Understanding the rise of self-employment 2019
The home on which the mortgage is secured may be repossessed if repayments are not kept up to date on the mortgage.