Buying a House in the Cost of Living Crisis
May 17, 2023


Buying a house can be challenging at the best of times. Fortunately, with professional mortgage advice and proper financial planning, buying a home during the cost of living crisis needn’t be out of reach. We’ve taken a closer look at overcoming the challenges of buying during economic uncertainty and achieving your home owning goals.

Is now the right time to buy?

Owning your own home gives you the flexibility and freedom to add value and build wealth over the life of your mortgage. A cost of living crisis might seem like the worst time to buy. But if you’ve saved the deposit, have a secure source of income and can afford the repayments, now could be the right time to get on the ladder or move to your dream home.

Will rising interest rates and inflation affect my plans?

The rising rate of inflation squeezes potential homeowners in two ways. First, your income doesn’t stretch as far as it used to. And second, the rise in the Bank of England base rate means mortgages, including fixed-rate mortgages, have become more expensive. In addition, lenders are likely to consider the rising cost of living when calculating mortgage affordability.

Before you start the mortgage application process, exercising tight control of your budget for six months can be beneficial. Demonstrating that you can make your mortgage repayments and have enough flexibility to deal with additional rate rises makes you attractive to lenders. You can start working with a mortgage advisor, who can help you find the most suitable deals.

Can I get a mortgage?

There have been plenty of horror stories about soaring mortgage rates. While there was a brief period of stability when 40% of products were withdrawn from the market after the mini-budget, it’s safe to say that mortgage rates are once again fluctuating dramatically

The best deals now have a shorter shelf life than ever and sell out fast, leaving would-be homeowners scrambling for the next most suitable offer. It’s worth remembering that good deals still pop up all the time, and seeking mortgage advice in Birmingham can take the uncertainty out of the process. 

Using professional mortgage services can help you get your finances in great shape and navigate the market to find the right deal for you.

Are house prices a problem?

House prices rocketed after the pandemic in the so-called “race for space”. And the average house price in the UK now stands at £290,000, meaning you’ll have to save more for your deposit. 

According to a Nationwide report, house price growth has fallen recently. However, buying your own home can be a great investment. A professional mortgage service will ensure you don’t overpay for your property and that repayments are affordable. In turn, this minimises the risk of falling into negative equity, where your outstanding mortgage balance is more than your home’s resale value.

How can I save for a deposit faster?

If you’re determined to buy your home as quickly as possible, there are ways to accelerate saving for a deposit, like the government’s Lifetime ISA scheme.

There are also several affordable home ownership schemes, with financial help from the government. In addition, we can advise you on help to buy offers and shared ownership deals, including part buy part rent in Worcester and Birmingham if you’re keen to get on the ladder.

Keep in mind that you must be 18 or over but under 40 to open a Lifetime ISA.

Kind Wealth is here to help

Whether you’re looking to get on the property ladder or put in an offer on your forever home, Kind Wealth can help. Our mortgage advice team in Worcester and Birmingham can help you navigate the challenges of buying a home, whatever the financial climate, so contact us today.

Note: Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

 

Sources:

  • Guardian: 40% of mortgage deals pulled since mini-budget; financial markets in turmoil – as it happened (https://www.theguardian.com/business/live/2022/sep/29/pound-slides-former-boe-chief-carney-accuses-government-undercutting-bank-business-live)
  • Forbes: What’s The Latest With UK Mortgage Rates? (https://www.forbes.com/uk/advisor/mortgages/mortgage-rates-03-05-23/)
  • Gov.uk: UK house price index for January 2023 (https://www.gov.uk/government/news/uk-house-price-index-for-january-2023#:~:text=The%20average%20UK%20house%20price,in%20Northern%20Ireland%20(10.2%25).)
  • Forbes: 1 March: Nationwide Logs First Annual Fall Since June 2020 (https://www.forbes.com/uk/advisor/personal-finance/2023/04/06/house-prices-updates/)
  • Gov.uk: Lifetime ISA (\https://www.gov.uk/lifetime-isa)
  • Gov.uk: Affordable home ownership schemes (https://www.gov.uk/affordable-home-ownership-schemes)

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 16/05/23.

 

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