3 October 2010
The United Kingdom housing market has reached a plateau this autumn - a situation welcomed by some, but a source of despair for others.
The Nationwide building society says prices have "stagnated", with no 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 boost their chances of obtaining the mortgage and home they desire?
First-time buyers
A social divide is likely to widen owing to difficulties in securing a mortgage without access to a large deposit.
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.
A rough estimate would show that an extra 5% deposit offered would make a mortgage interest rate .5% cheaper.
The chink of light for first-time buyers is the fact that prices have stagnated and show few signs of rising quickly in the near future.
This means that there is less pressure on buyers to put in an offer quickly, fearing the property price rising if they delay matters.
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 upgrading to a larger home
Those with a tiny amount of equity left in their home, could be in a similar position to first-time buyers. As with 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.
Potential purchasers/sellers should check out all available price information on the Internet.
They should also pay the most attention to the differential between 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 need for those retiring to rush into switching to a smaller home, securing a mortgage could be more of an issue than finding a home the very fact they are downsizing means that their equity 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 amount of people working at this age will probably increase.
Borrowers should check their timing to ensure their mortgage is paid off by the time they eventually do retire.
Relocating within the UK
The housing market differs greatly across the UK, with various property values and different rates of price change in local areas.
Market research of the area that the buyer is hoping to move to is vital, armed with all the relevant price information, will allow for an infomed sound decision.
Prices are affected by local issues, such as schools, new developments, and the future of big local employers.
However, with time, prices do tend 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're looking to move to, and making a judgement.
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.
Source: Base Articles
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