Mortgage Pressures for First Time Buyers
The property bubble of the past few years is predicted to be ready to pop over the coming months.
Banks are finding it more and more difficult to find lenders willing to loan to them, and if the banks cannot get money, then we have no-one to apply to for mortgages either. The lack of confidence in the housing market has caused many banks to be left standing on their own for fear of causing a collapse elsewhere. And we, the consumer, will end up bearing the brunt of it.
So what does this mean for property first-timers?
Well, it’s not a great time to be starting out unless you have managed to save up a large deposit to secure a property. Many mortgage companies are advising a minimum of 25% deposit.
This means that many first time buyers who have saved a 10% deposit won’t even be able to afford a one bedroom flat as they may be unable to get a 90% mortgage.
Even if you have saved a sufficient deposit you may not have much luck in finding your ideal home for sale during this time, as we see an increase in properties being withdrawn from the market.
How about those already with a mortgage?
Those looking to
remortgage need to plan ahead by a few months. Chase around and secure a good deal now which can be held for six months or so and then if things have improved then you can always switch. If not, you will more than likely have a better deal than you would have done.
What about those wanting to sell their house?
Advisors are recommending you hold off on selling for the present time. Many who are trying to sell have had to reduce the price of the property to make it more attractive. Essentially, if no-one can get a mortgage, no-one can buy your property.
During this troubled time, try to either save what money you can for the future, for a deposit on a place later on, or to pay off your existing debts and loans. You will be more likely to get a better finance deal on a mortgage if you have the least amount of debt possible, as lenders do not want to incur any more risk than is necessary.
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