Britain’s economic crisis – is now the right time to buy your first home?

Barfield Financial Advisors | Mortgage, Investment & Insurance Advice

We are living in a turbulent economy. On the one hand, there is the cost-of-living crisis, fuel poverty and the energy crisis. On the other, the property market has been standing strong throughout these turbulent times, even rising to an all-time high during the pandemic.

But with so much fear being spread on the news, is now the right time to buy? As a first-time buyer, should you be running to the nearest estate agent’s office, or should you be holding on and waiting out the storm?

Here is our view on 2023’s property market, and our advice for first-time home hunters buying in this economy.

Is now the right time to buy?

There isn’t a straight yes or no answer. The truth is that every home must be looked at on a purchase-by-purchase basis.

For example, let’s say you’re looking for a three-bed terrace house in your town. Local sales comparables show that the average price for this type of house is £115,000. However, a similar property in the same area is listed with an estate agent at £125,000, and the seller won’t budge.

In an instance like this, you would not buy. Not just because you’re overpaying, but because you run the risk of entering negative equity if house prices drop. Now, this isn’t to say that you need to be buying houses £20,000 below their value (as nice as that would be). It’s just important to make sure you do your research and buy at the right price.

There are many beautiful properties on the market today at a fair price. Just don’t rush into a purchase based on emotion. Make sure the figures work and you have a buffer in place if property prices decrease. It’s better to hold on than to rush!

What can you expect from interest rates?

Another popular topic is the rise in interest rates, however, these now seem to be dropping. Our advice for overcoming interest rate rises is to use a buffer when analysing mortgage calculators.

When we’re looking for our dream home, it is easy to underestimate costs to make them work. For instance, many people will be optimistic when calculating interest repayments. They’ll look at what they can change in their lifestyle so they can ‘just about afford it’. This is a dangerous game to play, especially in today’s economy.

Not being able to afford the house you love is a bitter pill to swallow, but it will protect you in the long run. Besides, next week a new house might get listed that is more affordable and just as attractive! We like optimism, but it’s always best to take a negative approach when calculating finances, inflating figures where possible to give yourself a nice buffer.

Picking the right mortgage

There is more than one type of mortgage available. The most common type is the fixed-rate mortgage, which means you pay a fixed return each month. There is also the tracker mortgage, which tracks a base rate, usually the Bank of England’s, and calculates your repayments based on this.

With uncertain interest rates, you might want to find a mortgage provider who has low repayments and fix yourself with them for 5-10 years. However, if you believe interest rates will lower, then you might want to look at an alternative option, such as a shortened fixed rate or a tracker mortgage, that gives you more flexibility.

The key is to work with a mortgage broker who can give you insight into the inner workings of the market and help you to make a decision that will benefit your family, future and finances.

Book your free initial consultation with our team by clicking here. We’ll talk you through the different options available and help you to buy your dream home, even during a turbulent economy.

Barfield Financial Advisors | Mortgage, Investment & Insurance Advice

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