You might not be aware of this, but the number of UK women who own their own homes is relatively small compared to their male counterparts. Until about 50 years ago, it was nearly impossible for unmarried women to purchase homes. A lot has changed since then. It is still harder for a woman to buy a home, but it is possible.
Knowledge is a female home buyer’s best tool. The more women know about how the system works, the better equipped they are to do everything from researching prices to selecting neighbourhoods and finding the best secured loan broker.
A Flawed System for Generations
Women were prevented from buying homes via mortgages for generations, thanks to a flawed system that treated them differently. Prior to the passage of the Sex Discrimination Act of 1975, women couldn’t even apply for a mortgage without the assistance of a male guarantor.
Back then, the thinking was that women didn’t have the earning power to make good on a mortgage. The male guarantor was required to give the bank peace of mind that any mortgage they offered would indeed be repaid.
We look back on that now and understand just how foolish it was. Yet some 50 years after the Sex Discrimination Act of 1975 became law, some vestiges of the previous system continue to linger. Women still struggle to obtain mortgages, even though there is no legal reason for it.
A Down Payment Is the Key
The key for single women looking to buy homes in the 2020s is the down payment. In fact, that has always been the key. Every home buyer, regardless of sex, must save a minimum down payment in order to get a mortgage. The higher the down payment, the greater the chances of being approved.
The UK used to offer a number of financial schemes that allowed buyers to set aside money and eventually get low-cost mortgages. Two of those schemes are no longer available:
- Help to Buy ISA
- Help to Buy Equity Loan (in England)
It is worth mentioning that the Help to Buy Equity Loan is still available in Scotland. Nonetheless, these two programs were an invaluable resource for people struggling to get that first home. There are other government schemes still in force. Buyers should still investigate them.
Things Single Women Can Do to Get That First House
So, how can single women get into that first house despite the difficulty? There isn’t a single path forward that works for every woman. But there are some options worth looking at in every scenario. Here are just a few suggestions:
1. Share Living Expenses
Since saving a down payment is the key, it might be worth foregoing independent living for 5-10 years in order to put money away. Women can share apartments with friends or coworkers. They can stay at home with their parents. By sharing living expenses – and significantly reducing the amount they pay for rent – they set themselves up with disposable income they can put right into the bank.
It goes without saying that this strategy requires financial discipline. Extra money is easy to spend on frivolous things. Therein lies the danger of a shared living arrangement built on greater affordability. If a future home buyer doesn’t force herself to put that extra money away, it could easily be spent.
2. Invest in Savings
Hand-in-hand with shared living expenses is an investment in savings. The word ‘invest’ is important here. Instead of just planning to put away extra money, a future home buyer should treat her savings as an investment.
She can set up an automatic transfer that moves money from her regular account into a dedicated savings account on a weekly or monthly basis. That dedicated account becomes an investment account that is completely off limits. By automating deposits to that account, a buyer is forcing herself to save money that will not be used for anything other than a down payment.
3. Get an Education
As women are saving up money for their down payments, they can also get an education. More specifically, they can educate themselves on how home buying and mortgages work. There is plenty to learn about, like:
- Mortgage interest rates
- Stamp duty
- Property taxes
- Mortgage fees
A lot goes into a home buyer’s monthly mortgage payment. If a prospective buyer doesn’t understand it all, how can she know that she’s getting the best mortgage for her budget? It is not easy.
4. Use a Mortgage Broker
When the time eventually comes to buy, a buyer should use a mortgage broker rather than going right to a lender. Lenders look out for their own best interests. Mortgage brokers look out for the buyer’s interests. It is their job to guarantee that a client gets the best possible mortgage.
It’s still difficult for women to buy homes in the UK. But difficult doesn’t mean impossible. With a thorough knowledge base and some financial self-discipline, that first house can be a reality.
