This is evident from a report from mortgage provider Nationwide, which found that 66% of first-time buyers surveyed chose a cheaper home because it required DIY or renovation work.
Although many – three quarters – ended up carrying out much more work than originally planned, and 18% took on major structural work, it seems this is quickly becoming a popular route for aspiring homeowners to take their first step onto the property ladder.
Nationwide, which surveyed 2,000 first-time buyers as part of its research, said the decision to opt for a fixer-upper was often a strategic choice rather than a compromise.
For 41% of those who chose a project, this allowed them to buy in the specific location they wanted. In fact, this was the most common reason for purchasing a fixer upper.
But 30% said this meant decorating their home to their own taste, and 23% wanted to increase the value of their property or prepare for future plans such as starting a family.
How much did a renovation cost for the first buyer?
The cost of this extra work set 60% of respondents back £2,500, but almost a third spent more than £5,000 on painting, decorating, new flooring, general repairs and kitchen and bathroom improvements.
However, some projects can add more value, Nationwide said. A loft conversion or extension with a large double bedroom and bathroom can increase the value of a typical three-bedroom house by up to 24%.
How a mortgage can support renovation costs
Nationwide reported that many first-time buyers took these additional costs into account. Nearly two-thirds (62%) took DIY or renovation costs into account when building up the deposit.
However, more than a fifth (21%) borrowed more on their mortgage so they could keep their savings to fund improvements after moving.
Nationwide said the Helping Hand mortgage boost supported eligible first-time buyers by allowing them to borrow up to six times income. For some, this could mean securing a home while saving money for essential renovation work.
Louis, 30, from Essex, who used Nationwide’s Helping Hand to buy his first home in Southend, released savings that would have been used for the deposit to fund the renovation costs of the property.
Louis said: ‘The property I wanted to buy needed some work, so when my agent, John Charcol, mentioned Nationwide’s Helping Hand, it seemed like the perfect solution.
“Being able to borrow more through my mortgage allowed me to make a smaller deposit, which freed up money to spend on renovating the house. I already bank with Nationwide, so it’s great that I was able to get my mortgage with them too in a smooth and quick process.”
Financing a fixer upper: Advice from a mortgage broker
Taking on a project can be a great way for first-time buyers to get on the property ladder, but Nicholas Mendes, mortgage technical manager at mortgage broker John Charcol, advised those considering this route to plan carefully.
He said: “There is a big difference between painting walls, replacing floors and slowly improving a kitchen, and buying a property that needs shell work, new wiring, a new roof or major damp treatment.
“These costs can add up very quickly, and starters are often the least able to afford them, because a large part of their savings has already been invested in the deposit, legal costs and moving costs.”
He explained that there were mortgage products, such as Nationwide’s Helping Hand, that allow higher borrowing and could help some buyers, but he said they need to be approached with caution.
“Borrowing more easily to obtain a home only works if the monthly payments remain comfortable and there is still a good emergency buffer,” he explains.
He suggested buyers get proper research and realistic quotes before completion. It’s also a good idea, he explained, to make a clear distinction between work that is essential and work that can wait.
“For first-time buyers, the goal should not be to immediately create the dream home. It should be to buy something affordable, secure and mortgage-worthy and then improve it incrementally without putting themselves under undue financial pressure,” he concluded.