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How to purchase in today's market

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By : Brazg Gavin    99 or more times read
The UK housing market has reached a plateau this autumn - a situation welcomed by some, but a source of despair for other people.

The Nationwide building society says prices have "stagnated", without any change on the latest three-monthly comparison of average property values.

Lending at present is at an incredibly low level due to the lack of supply and demand of home loans.

So what knock on effect does this have on the various groups looking to move home, and what can they actually do to improve their chances of obtaining the mortgage and home they want?

First-time buyers

A social divide is growing due to the immense difficulties in actually obtaining a mortgage if they do not have access to a substantial down payment. Young first-time buyers who are fortunate enough to have help from their parents with the deposit, are far more likely to get on the property ladder.

More mortgages with a deposit of less than 25% are available now than was the case a year ago, he says, but the bigger the deposit, the more competitive the rates.

An approximate estimate would show that an additional 5% deposit offered would make a mortgage interest rate .5% cheaper.

The glimmer of hope for first-time buyers is that property prices are going nowhere for the time being, remaining stagnant. This means that there is less pressure on buyers to put in an offer swiftly, fearing that the price would keep going up if they delay for a few months. The increasing numbers of properties coming on to the market mean first-time buyers can haggle on prices.

Take asking prices with a pinch of salt, buyers should look seriously at two or three properties, rather than setting their heart on one which might be overpriced.

Family moving to a bigger home

Those with a tiny amount of equity left in their home, could be in a similar position to first-time buyers.

Much like first-time buyers, it is vital to keep up a good credit rating so that a competitive mortgage may be obtained. Lenders may now also ask for the last three months of bank statements, so extravagant spending might be better put on a credit card and then paid off immediately, rather than on a debit card where the spending is obvious to the lender. Making sure that all utility bills are paid and up to date, ensuring that all family members are on the electoral roll, not habitually switching/closing bank accounts all help to maintain a good credit score. families should arm themselves with all the price information that is available on the Internet.

They must also pay the most attention to the differential relating to the price they're selling and the one they are buying at - and ensure this is within manageable levels.

Pensioner looking to downsize

With many properties coming onto the market, there is no immediate hurry for those retiring to race for a smaller home, Actually obtaining a mortgage could be the real fly in the ointment as opposed to finding a property to buy, by the very fact that they are downsizing means any equity that they have, will go further. However, lenders are reluctant to give home loans to people who would still be paying them off after the age of 75. With the default retirement age likely to be scrapped, the number of people working at this age will probably increase.

Borrowers should check out their timing to ensure their mortgage is paid off by the time they eventually do retire.

Moving to a different area of the UK

The housing market differs greatly across the UK, with various property values and different rates of price change in local areas.

It is worthwhile looking at the trend in prices where purchasers are looking to move to, and making a judgment. Prices are influenced by local issues, such as schools, new developments, and the future of big local employers.

However, with time, prices do have a tendency to catch up in areas which have lagged behind the national average, or slow down when prices have been over-inflated.

So flexibility in timing when to buy is key, it's worthwhile checking the trend in prices where you are looking to move to, and making a judgment.

People often do not do enough homework on the local market because of the distances involved in searching for properties somewhere new.

Anyone who is self employed has to literally jump through hoops to get a home loan, a variable income means that they are not a 'safe' bet.
If you need more information on property valuation visit TheAdvisory for FREE guides and handy advice.

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