For some first-time buyers (FTB) the lockdown introduced to slow the spread of Covid-19 provided an opportunity to save some much-needed money towards a deposit for their first property.
What’s more, mortgage rates have fallen because the Bank of England reduced the base rate to its historic low of 0.1 per cent.
However, is now a good time to buy your first home given the economic uncertainty? An article for This Is Money recently explored some of the elements that FTBs need to consider when deciding whether to take their first step onto the property ladder.
The news provider noted that the low interest rates, and therefore low rates on mortgages, have been attracting FTBs who have a deposit and are in a position to go ahead with a purchase. In fact, one-fifth of FTBs surveyed by Nottingham Building Society revealed that they would be in a position to buy somewhere sooner as a result of the rate cut.
One stumbling block for some FTBs could still be the level of deposit that’s required, however. The publication pointed out that, while there are still some deals available that will lend to buyers with as little as a five per cent deposit, these are hard to come by.
The average deposit required is currently 15 per cent, which equates to nearly £35,000 based on the average UK house price of £231,855 according to the Land Registry in March of this year.
With such a large sum of money to find before you can make a purchase, it’s easy to see why you might focus on saving for your deposit. However, it’s important to factor in the other costs associated with purchasing a property.
These can include paying for a full building survey, as well as finding conveyancing solicitors in Epsom, or wherever you live, to carry out the searches and other legal aspects of a property purchase.
The newspaper also pointed out that FTBs should consider mortgage arrangement fees when shopping around for the best deal. Although these are often added to the mortgage on completion, it’s important to know what they are and whether these will make the overall value of a mortgage more than another deal with lower fees, for instance.
A number of property experts recently spoke to the Metro about the state of the property market and whether it’s advisable to buy a home as we enter a recession.
The general consensus is that now could be a good opportunity to take that first step for buyers who have the funds available to do so.
Regional sales director at Chestertons Tony Gambrill said that whenever you buy a home you always run the risk that prices can go up or down. However, he added that FTBs could do well at the moment because they “will be able to enjoy some low mortgage rates and prices in many areas are a bit lower than they were previously”.
However, he advised FTBs to think carefully before stretching themselves too far financially at present, especially if they don’t have good job security.