Is now a good time to get on the property ladder?
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My partner and I are thinking about buying our first home together. We don’t qualify as first-time buyers as my partner had a property with a former partner. House prices are high at the moment but the low Bank of England Base Rate should give us a decent mortgage interest rate. Is now a good time to buy or should we wait until next year?
Diane Fish of Smith & Pinching responds:
It’s impossible to say for sure when would be the best time to get onto the property ladder as market prices and interest rates depend on so many factors. It is indeed the case that property prices are currently high, but rises do seem to have steadied a little at the time of writing (early December).
Most commentators think that the Bank of England Base Rate is very likely to creep up a little in the coming months, and any changes will have an impact on those mortgages with interest rates that track the Base Rate. However, there are mortgages that offer a fixed rate for a given period so these would be unaffected by Base Rate changes for that initial period.
In fact, property prices and interest rates are almost a secondary concern when looking at your mortgage options. Affordability and availability of a deposit are the factors that usually determine what you can borrow. The best deals will come with higher deposits, so saving for a larger deposit may be to your advantage, although you would need to set the cost of additional months’ rent against that.
If the deposit is an issue for you, the government’s mortgage guarantee scheme may enable you to enter the market with a lower deposit, provided you can meet the affordability criteria set by the lender, or you might like to look at one of the shared ownership schemes that are available to you. Other support, such as the Help to Buy scheme, is only available to first-time buyers, but some lenders will treat you as first-time buyers if you haven’t owned a property in the last three years.
I think your best way forward would be to sit down with an independent mortgage adviser and work out if you are currently in a position to get a mortgage for the type of home you want to buy.
Your home may be repossessed if you do not keep up payments on your mortgage. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum advice fee is £700. Any opinions expressed in this article do not constitute advice.
For more information, please visit www.smith-pinching.co.uk