| |
| |
|
Mortgage & Refinancing Information |
|
|
|
Save This Page Links 
allspectrum.info Link exchange submission form: First-time House Buyers: to Buy or Not to Buy; that is the Question
Buying your first house is always a difficult time. There are so many important decisions to make, and problems to be solved, which combine to make it one of the most stressful events that will occur in most people's lives. Some of the most obvious problems include the need to: * find a suitable house to purchase * plough through complicated financial information * choose an appropriate mortgage that will cover the cost of the house and is within your own strict budgets * save up enough money (usually whilst still renting another property) to cover a mortgage deposit * deal with unfamiliar legal fees, surveys and other costs * make a realistic offer on your prospective new home * waiting to see if the offer is accepted * complete the purchase * move and get settled in the new house, with whatever decorating/rebuilding is required Given these factors, it is perhaps not surprising that first-time buyers can be the first to get spooked by changes in the housing market. First-time buyers (FTBs) make up an extremely important sector of the house buying market, and many analysts view them as the life blood of the whole housing market. Without them a housing slowdown or even collapse of the system is inevitable. Recent reductions in the number of FTBs purchasing houses, with Scotland achieving its lowest annual total for nine years, and the increasing struggles experienced by FTBs trying to get onto the first rung of the property ladder will have serious knock-on effects, which are already being experienced around much of the country. National Savings and Investments (NS&I) Senior Savings Strategist Dax Harkins said: "Despite a recent cooling house market, house prices have continued to outstrip both savings rates and incomes over the last year which means potential first-time buyers need to start saving sooner and harder to get into the market." Whilst house prices continue to increase at a faster rate than people's incomes there will be fewer people able to afford a house. In a recent study NS&I found that the average length of time required by FTBs, to save for a 5% mortgage deposit, ranged from five years in East Anglia, to three years, nine months in Scotland, with the average being four years and nine months, this is nine months longer than a year ago. The average age of first-time buyers also has increased, going from 37 from 31 three years ago. The property website Rightmove has warned that the housing market could remain static for several years whilst it waits for the incomes of FTBs to catch up with the housing prices. Miles Shipside, commercial director of Rightmove, said "As many sellers are refusing to part with gains they have made, buyers are forced to make up the affordability gap?The reality is it will take seven years of static house prices and wage inflation to bridge this affordability gap." Marjorie Townsend, head of Edinburgh-based Lindsays Residential, says: "It was recently reported that an average home in Edinburgh costs seven times the income of the majority of nurses. This is a shocking statistic." With over one in six FTBs turning to relatives and more high street lenders offering 100% mortgages, or even 102% from Lloyds TSB and Scottish Widows, to help buyers get onto the property ladder, some may be able to squeeze onto the first rung, but end up with long-term crippling debt in the process, fuelling the continued house prices inflation. Various banks have come up with innovative methods to help facilitate the ability of FTBs to purchase a house which, whilst not addressing the real problem of house prices, will allow more people to own their own home. A guarantor mortgage can increase the amount that can be borrowed, as long as the borrower's parents have enough income to cover all their own debts, plus their child's mortgage each month; however the parent will not have to make any payments themselves unless their child's mortgage goes into arrears. An offset mortgage could mean that money from a parent's savings account can be offset against their child's mortgage. Although the parent would not receive interest on their savings, the reduction in the amount to be paid by their child could make a big difference, and they would not incur tax on the amount either. A 'Professionals' mortgage is a possibility for certain workers, which allows them to borrow more than their initially low-pay career would usually make them eligible for, on the understanding that their future pay will increase rapidly as they become high earners. Whilst some may urge for caution to prevent the possibility of building up financially crippling levels of debt, others see a need for buyers to act fast. Marjorie Townsend, of Lindsays Residential, believes: "The best advice for first-time buyers is to move quickly ?There really is nothing to be gained by waiting for a competitive closing date, which will drive the price up. There are lots of sellers out there who are eager to sell and whose particular circumstances may require a quick transaction." Overall it seems that the situation for FTBs will continue to prove difficult unless a major change occurs that bridges the gap between income and house prices for those in most need. Recent government initiatives such as the Shared Equity scheme, that allows part ownership of property, may go some way to enabling some FTBs to start out, but Ed Davey MP, the Liberal Democrat housing spokesman, believes the policy could make housing even more expensive, "It seems to be looking at the demand side which could stoke house price inflation and make the problem of affordable housing even worse." Until the issue of supply and demand is addressed, there will continue to be problems. According to the Barker Review, which was published in April, up to 140,000 new homes need to be built each year in the UK if supply is to keep up with demand. Even if new homes are built at this rate, the time taken to stabilise the market will mean further delays for prospective new buyers who want to own property. Further information: Richard works in Edinburgh for Bigmouthmedia, occasionally writing for the personal finance blog Cashzilla, and drinking too much coffee.
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
What Your Mortgage Lender Is Not Telling You About Accelerated Mortgages For years, mainstream banks and financial advisors have been recommending that you pay extra cash into your mortgage account in order to cut down the huge interest amount and reduce the period over which you pay back the loan.For example, if you borrow $200,000 over 30 years at a rate of 5%, your monthly repayments would be around $1074. Composite Credit Report Score Simplifies Mortgage Issues Do you want a mortgage loan for your new home? Trying to qualify for a new mortgage can be very tough, especially if you aren't aware of the effect your credit report score has on your ability to get approved for loans. One of the first things a lender looks at to determine your suitability for a mortgage loan is your credit report, or FICO score. Hard Money Loans - Reasons Why You Might Want To Try Applying With A Subprime Mortgage Lender Before you apply for a hard money loan, try applying with a subprime mortgage lender first for lower rates and fees. Hard money lenders charge excessive fees to high-risk borrowers, but will only lend 50% to 75% of the value of the property. Obtaining a Home Equity Loan Online Private lenders, banks, and mortgage companies are all setting up shop on the internet, and all make it possible to obtain a home equity loan online. Competition between lenders is stiff, so be sure to check a few companies that offer applications about their rates, products, and customer service. When is the Right Time to Refinance Your Mortgage? You've heard that interest rates are down and you think it could be time to refinance your existing mortgage, but the entire loan application process was so exhausting during the initial loan that you aren't sure it's worth the hassle. You could very well be right, but there are some things you can do to help decide whether it's time to refinance your mortgage. Save Time With a Bridge Loan Why You Need a Bridge LoanYou have to move fast in today's housing market if you want to get into the home of your dreams. In cities such as Seattle or San Francisco it's not uncommon for a buyer to receive half a dozen offers within the first day or two after putting the house on the market. 5 Things In Selecting The Best Mortgage - You Should Know Your goal is not only to find the best rates and programs, by searching through a huge number of lenders products, and save yourself thousands of dollars on mortgage payments every year, but also, to save time and hassle by simplifying the loan process and reducing the paperwork. Here are some things you can keep in mind when selecting a mortgage provider. What Length Mortgage Is Right For You? You've found the home that is right for you, and now you need to do the same thing for a mortgage. There are several options for people out there, each one designed for a different type of buyer. Refinance Online If you want a low interest, low payment mortgage refinance, refinancing online could be the answer. There are many mortgage companies who specialize in mortgage refinancing online. Bad Credit Home Loans - Dealing With Bad Credit Mortgage Companies Online Dealing with mortgage companies online can enable you to get a home loan even with bad credit. Bank associates' skepticism and talk around are avoided when you apply online with a mortgage broker. Remortgage Debt Consolidation - The New Recourse For Credit Crunch Shakespeare once said about human nature 'with nothing shall be pleased, till he be eased with being nothing'. It is human nature to not be satisfied with anything for long. Home Equity Loan - When Does Refinancing Make Sense? For the last two years, interest rates have been much lower than anytime during the last thirty years. This has resulted in an unprecedented boom in real estate sales, home refinancing and home equity lending, as borrowers try to take advantage of these rates for the long term. Homes, To B(uy) or Not to B(uy) Whether you are just moving out on your own for the first time, or you've moved ten times before, there is always a big choice to make. Do you rent or buy your home? There are valid arguments on both sides, and in different scenarios either one could be the right choice. Home Equity Loan vs. 401(K) Loan -- Which Should You Choose Home Equity Loan vs. 401(K) LoanYou've finally decided to add that patio you've always wanted to your home. Home Equity Loan Considerations In other words, the benefit of the loan must outlast the loan period. Taking a loan for financing that elusive vacation is a strict no-no. Mortgage-Refinance Loan Measurment 101 -- Evaluate Your Own Ability to Pay We live in a society where people are losing their homes at an alarmingly high rate. There are several reasons for this, but one could certainly be avoided -- buying a house that creates a loan that is too large for you to handle. Jumbo Mortgage Loans - Getting Approved for a Jumbo Mortgage Loan Online Getting approved for a jumbo mortgage loan online is similar to getting approved for a traditional mortgage when you use a mortgage broker. However, you can expect to find lower interest rates online with better terms. What is a Reverse Mortgage? Simply stated, a reverse mortgage is a loan that enables homeowners (age 62 and older) to convert part of the equity in their home into a tax-free income without having to sell the home, give up the title, or take on a new monthly mortgage payment. More and more homeowners are using this to supplement their retirement income, pay for health care, modify their home, or just get some cash for emergencies. Mortgage Marketing W. Edwards Deming said "Marketing and innovation are the only source of value in business, everything else is a cost". Lesser Known Facts About Home Equity Loans Refinancing your debt via a home equity loan shifts your debts loan to your home. The flip side to such a move is that your home is on the line.
|
