In recent years the media have focused ample attention on the frustration experienced by people trying to get on the property ladder.
Despite government initiatives to make things easier for first-time home buyers, not to mention the historic low-interest rates, it seems that in many ways it is only getting more difficult as house prices have continued to rise.
But it isn’t all bad news, so if you count yourself among those eager or frustrated souls longing for a place to call their own, pay attention.
Are things looking up for first-time buyers?
In May 2016, leading ratings agency Moody’s projected that first-time homebuyers in the UK could benefit from Brexit. Gaby Trinkhaus, a vice president and senior analyst at Moody’s, said that by leaving the EU, the influx of EU citizens into the UK would drop, and the reduction in competition for housing would benefit first-time buyers.
The benefits would occur mainly because inflation of house prices and rents would slow down should immigration be curbed. She added that regardless of the referendum vote, the projection for first-time buyers was looking more optimistic, at least in London.
Much of the optimism where London is concerned can be traced back to the agenda laid out by London’s new mayor, whose platform included an ambitious commitment to expanding the availability of affordable housing in the city.
Or would Brexit leave the UK facing impending economic doom?
While would-be house buyers and mortgage lenders are likely welcoming the prospect of Brexit, International Monetary Fund (IMF) managing director Christine Lagarde warned that as Bank of England’s governor Mark Carney has claimed, leaving the EU following the Brexit referendum could result in something far more dramatic and damaging than a mere reduction in house prices.
A worst-case scenario would be a complete crash in those prices, followed by a crash in the stock market, which would plunge the UK back into a recession.
Finding the right mortgage can be a challenge
For those prospective home buyers who have decided to take the plunge and begin or continue their climb up the property ladder, there is more to consider than the implications of Brexit or the trend in housing costs. One element that too many buyers fail to consider is the fact that members of the mortgage lending industry have responded to the heightened interest in home buying with various incentives to make their offerings more competitive.
Overlooking this trend can end up costing the house buyer thousands of pounds over the life of their mortgage. And since for most people, the value of their homes represents the bulk of their savings pot, that additional cost could feasibly spell the difference between a comfortable retirement and one plagued with financial worries.
Making an educated choice between the offerings of the various mortgage lenders can prove to be a daunting effort, but there are resources that can greatly simplify that effort.
One valuable resource to assist the buyer in this task is readies.co.uk, on which there is a mortgage comparison page that allows the prospective buyer an at-a-glance look at the actual cost and terms of a given loan from numerous lenders, to help determine which mortgage and provider best meet the buyer’s needs.
There is even a page on the website devoted specifically to assisting first-time buyers in understanding the different kinds of mortgages and the mortgage process as a whole.
Don’t overlook Help to Buy – but time is running out
If you have a less-than-perfect credit history, lack the cash to pay 20 percent of the purchase price, or even if you’ve been turned down for a mortgage already, don’t give up just yet. The government has set up a programme called Help to Buy to assist prospective home buyers who are having difficulty getting a traditional mortgage loan.
The programme works like a conventional mortgage, and the loan is taken out with a traditional provider. The difference to the lender – and it is a big difference – is that the lender is given the option to purchase a guarantee on the loan, thereby dramatically reducing their risk should the borrower default.
For the borrower, the programme reduces the amount of cash that the buyer must come up with in order to qualify for the loan. Of course, the borrower is still responsible for repaying the loan, and will be liable for any judgment, should he or she fail to make the payments as agreed.
In such a case, it would be the government that would seek compensation, rather than the lender. To see of you qualify for Help to Buy, check the eligibility page on their website. But you don’t want to delay, as the programme expires in December of 2016.
As the old song goes, there’s no place like home. And when you own that home it can be all the sweeter. Regardless of the outcome of Brexit, and regardless of factors that place obstacles in your way, you don’t have to give up on the dream of home ownership.
You do have to keep apprised of what’s going on in the housing market, and be poised to take advantage of schemes and initiatives that can help you get a leg up on the property ladder.
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