MortgagesPersonal Finance

Is Now A Good Time To Get A Mortgage?

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With house prices in a state of flux, you might find yourself wondering is now a good time to get a mortgage?

On one hand, if you’ve got your finances in order and have found a house you love, you might miss out if you don’t take the plunge. On the other hand, there has been a lot of fluctuation in the property market in recent months and things haven’t quite settled yet.

Nobody has a crystal ball that can accurately predict what’s to come, so it’s important to do what’s right for you (even if sometimes that means there’s a compromise).

It’s essential to consider your individual circumstances. While it might be an ideal time for one person to buy, it might be advisable for another to hold off a little longer.

There are a few factors to consider when looking into whether it is a good time to get a mortgage.

Are House Prices Consistent?

House prices will always change, that’s a given, but the consistency of the market is still something to consider. If experts warn we’re on the brink of a big crash, it could potentially leave you in negative equity shortly after you’ve bought.

This might not seem like an issue if you’re buying your ‘forever home’. However, it might make it more difficult to move down the line. Even if you plan on living in the property for the rest of your life, you might have some difficulty re-mortgaging when the time comes.

Some lenders find it difficult to offer a good deal on properties in negative equity, meaning when your current mortgage deal ends, you might end up paying a lot more.

Can You Cope if Your Mortgage Rate Goes Up?

Another important thing to consider right now is whether you can afford to pay your mortgage if it increases. In recent months it has been reported that mortgage rates are on the up, and homeowner have noticed an increase in their monthly repayments.

If you’ve got a mortgage with a fixed rate, then things are unlikely to change until that fixed rate period is over. However, if your mortgage has a variable rate then your mortgage is likely to increase, and a tracker mortgage almost certainly will.

The risk is, if you buy a house that’s already a stretch, any increase in your mortgage repayments might be unsustainable. While lenders will conduct their own affordability checks, it’s still worth taking a close look at your finances. It’s essential to look into whether you can continue to make repayments should the rates increase again.

Are The Current Mortgage Rates Likely to Go Down in The Next Few Months?

Nobody can be certain of what will happen with mortgage rates in the coming months. Experts suggest once the rates have peaked, they should slowly fall before they stabilise. While this might mean some changes to rates in the near future, it is thought that the decrease comes much slower than the increase. This can mean a few months might not be enough time to make much of a difference. 

It could be worthwhile waiting and observing what the interest rates are doing, but that will depend on your circumstances.

Are House Prices Likely to Go Down in the Next Few Months?

As with interest rates, house prices tend to peak before they fall but any changes take a little while to show in the market. This is because market demand needs to decrease before those prices reduce.

A decrease in demand is usually directly related to house prices reaching their peak. The prices will reach a point that becomes a little too unaffordable and that’s when movement in the market starts to slow.

House prices are still predicted to fall, but a few months might not be enough time to see a notable difference. If you’re cautious and prefer a wait-and-see approach, it’s a good idea to keep up to date with news from the property market and to pay attention to the experts. They base their predictions on trends and some can be quite accurate.

Have You Found the Perfect House?

Finding your perfect house can stop you in your tracks and make you want to do whatever it takes to get it – even paying over the odds. Many people have a list of criteria for what the ‘perfect’ house will have in terms of size, location, price, and a other factors. 

If your idea of the ‘perfect’ property is hard to come by, you might be tempted to act rashly. For example, if you’ve been desperate to live in a certain area for a while, but houses don’t come up very often it, could seem like your only chance to buy a property like this.

Some might advise you not to let your dream home slip away, after all, if you don’t buy it, somebody else will. If you’ve considered all the pros and cons of buying the house versus holding on and waiting, but buying it still wins, then it might be worth following your heart. Your mortgage advisor should be able to talk to you about whether it’s a wise move and if it will still be affordable if anything were to change.

Can You Afford to Wait?

People buy a house for many reasons, but some may be more urgent than others. For example, a first time buyer still living with their parents may benefit from waiting a few months to see if they can get a better deal. On the other hand, they might be desperate to leave and want to buy ASAP!

Someone who has recently had a relationship break down might benefit from moving sooner, rather than letting their savings dwindle in rented accommodation. Only you will know what is right for your own situation.

Waiting might see you lose out on your ideal house, or it could cost you less in the long-run. While the decision needs to be yours alone, it’s worth considering all the points made above to check if now is the right time for you to get a mortgage.

About author

Master of the budgets. Provider of the tips. Author and owner of DumbFunded.co.uk.
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