Why is now the right time to buy your first home?
Banks are currently making it easier for first time buyers to get on the property ladder by offering the lowest mortgage rates since records began in 1995. Interest rates on two and five year deals have fallen to a 23 year low, according to the latest bank of England figures, meaning that home buyers can now secure a low fixed mortgage rate to protect themselves from future interest rate rises.
With the uncertainty of Brexit affecting the general economy, savvy buyers are using this to their advantage and securing good deals on properties.
Other factors to also bear in mind are that monthly mortgage repayments are now lower than rent in most of the UK and the tax you have to pay when buying a home, known as stamp duty, has never been lower for first time buyers. In fact, it has been completely abolished for properties worth up to £300,000 (with an additional relief between £300-500k in London).
If you wish to own your own home then it is wise to get on that all important ladder as soon as possible. This advice is particularly poignant following the FCA’s latest statistics which showed that 4 in 10 borrowers will still be paying off their mortgage well into retirement. Easier credit conditions and a slowdown in house price growth in recent times has improved the situation for young first time buyers and as a result home ownership rates among 25-34yr olds have risen by 3% since they hit 25% in 2016.
A recent survey has shown that First time buyers who have bought homes in the past three years have said that they struggled to understand the terminology surrounding the process, including the mortgage application process. This is why the benefits of using an experienced mortgage broker should not be underestimated. A good broker can find you the best mortgage deal based on your individual circumstances and can guide you through the application process which will help to ease the stress and anxiety of what should be an enjoyable and exciting time in your life.
A common misconception is that you don’t need to think about mortgages until you have found the property of your dreams. Although you won’t actually need to apply for a mortgage until you have had an offer accepted, you will certainly need to have scoped out mortgages before then to check what you can afford. A good way of getting an accurate idea of your budget is to apply for a mortgage ‘decision in principle’ (DIP). This is a statement from a lender that they would, in principle, lend you a certain amount of money. Estate agents will request this before accepting an offer on a property from you.
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*Your House may be repossessed if you do not keep up with your mortgage repayments*