Study: East London boroughs among most affordable for first-time buyers

The council could make it easier for house buyers. Picture: PA Images/Yui Mok

Barking and Dagenham is the second most affordable borough for first-time buyers, with Newham third, according to a new study. - Credit: PA Wire/Press Association Images

Barking and Dagenham and Newham are among the three most affordable London boroughs for first-time home buyers in 2021, analysis suggests.

Online mortgage broker Mojo Mortgages’ first homes scheme affordability index looked at factors affecting home affordability in 2021, including house prices, average annual salary and monthly take home pay. 

Barking and Dagenham was found to be the second most affordable with the average monthly mortgage repayment taking up 30.27 per cent of a couple’s take home pay, while Newham was third with 31.68pc.

This was calculated based on the typical property price in the borough and the average annual salary - £311,304 and £29,078 in Barking and Dagenham or £348,094 and £31,401 in Newham.

The average monthly repayment figures assumed a 10pc deposit with a mortgage term of 30 years at 3pc interest. 

Bexley was the most affordable (29.82pc) borough while Camden (64.14pc) was the least, the broker said.

Mortgage expert at Nisha Vaidya said it is important to establish how potential repayments fit into your monthly budget before considering your mortgage options.

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“It can be difficult to understand how much you can afford,” she said. 

“There are many factors, like your salary, regular outgoings, and 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.” 

The index follows the government launching the First Homes scheme. 

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

However, this discount will apply throughout the lifetime of the property, including when the home is resold in the future.

Mojo Mortgages director of mortgages Cassie Stephenson added: “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."