Good time to buy your next home?
UK Property sales have slowed or as some describe ‘died’ and mortgage applications are at the lowest acceptance rates for years. The UK property market can seem to be in a tail spin at present and it is hard to look anywhere without apparent bad news emerging. Though, is it bad news for everyone?
For those people on fixed rate mortgages that are coming to an end with a high Loan-to-value (LTV) mortgage deal there are without doubt; unfortunately going to be difficult times ahead and the possibility of securing a mortgage with an attractive interest rate seems to be reducing.
However, to bring some positivity into the current market it does present attractive buying opportunities for some. Lets take our young couple who entered the property market 5 years ago and successfully obtained a relatively small mortgage in todays standards and have made their mortgage repayments since then on time.
For arguments sake, lets say that their starter 2 bedroomed home was ‘worth’ £100k a year ago and the 3 bedroomed semi-detached property they have been saving towards and aspiring to since their intial purchase at that time was priced at £150k. So in this simple example we can see the cost to ‘upgrade’ was £50k.
As we are are witnessing the property market is returning to more sustainable levels that have been forecast by some, such as the people over at HousePriceCrash.co.uk and Alice Cook at UK Bubble. To return to our example, property prices continue to fall as is widely predicted and ‘our’ couples home is now worth £80k.
‘Ouch’ i hear you cry, ‘they have lost £20k’ but is this the truth and is it really such a bad situation in reality? No, not for our young couple and here is why…
If the couples home is now worth £80k and in affect has lost 20% of its value, that means it is likely that the 3 bed semi-detached has also lost 20% of its value. and is now worth £120k and the magical, important figure to upgrade is now £40k. In comparison to the previous calculations our couple have saved £10k which will be ever so gratefully received and used with the new baby they have arriving.
The ‘truth’ is……
For those looking at upgrading to a more expensive home in the near future with the ability to secure a mortgage within the falling market, it is maybe not such a bad time after all to be active in the current property market. Now where are the details for my local estate agent and that good property website i came accross?
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