UK house prices fall for first time this year – How to get on the property ladder

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Martin Lewis gives advice on Lifetime and Help to Buy ISAs

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The property expert released new data in their August House Price Index which showed a cooling in the upper-end house price sector, causing averages to fall. As buyers are no longer able to save large sums through the stamp duty holiday, this fall in prices is welcome news to all potential homeowners, but what does it really mean for those looking to get on the  property ladder? Express.co.uk spoke to the experts to find out.

After months of consistently high house prices across the country, the decrease which was announced today means that the average home now costs an average of £337,371, having reduced by £1,076.

Phil Bailey, director at Twenty7Tec told Express.co.uk: “With house prices starting to show signs of normalising post the stamp duty relief, interest rates at historic lows and mortgage lenders beginning to relax criteria once again – the market looks appealing for many to buy or move home.

“Although, with 14,378 mortgage products currently available in the market, an increase of nearly 50 percent over the start of the year, many homebuyers will need help to navigate this busy and still rather complex market.”

How to get on the property ladder

Seeking good quality, professional mortgage advice is paramount from the very start of your home buying journey to ensure you choose the right mortgage based on your deposit.

Don’t stop saving

Just because house prices have dipped, don’t put your savings on hold.

A general rule of thumb for most mortgage providers is that the larger your deposit, the cheaper your mortgage rate will be.

James Andrews, senior personal finance expert said: “The first step to building a deposit is to work out how much you need to save.

“This figure is based on two factors – the value of the property you intend to buy and the LTV (loan to value) of the mortgage you want to take out.

“Every mortgage comes with a maximum LTV, which is the highest percentage of the purchase price it can cover – for instance, with a mortgage with a maximum LTV of 85 percent, you would need a deposit of 15 percent or more.”

Utilise Government schemes

The stamp duty relief holiday may be over, but there are still opportunities to save or seek financial aid when building your deposit.

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If you’re a first-time buyer take advantage of Government schemes such as:

  • Help to Buy – equity Loan.
  • Help to Buy – mortgage guarantee scheme.
  • Lifetime ISA

Price comparison website money.co.uk recommends using a mortgage interest calculator to compare various deals and make sure to pay attention to the small print so you’re aware of any increases in interest.

Look into fixed-rate mortgages

When searching for a mortgage deal it is crucial that you look and plan beyond the initial deposit to calculate interest repayments.

Several schemes are available that allow you to put down a lower deposit, however, they often come with significantly higher rates of interest over time so doing the maths is key to avoiding unexpected costs.

Unlike a variable rate mortgage, a fixed-rate mortgage comes with an interest rate that stays the same for a set period of time.

The main advantage of fixed-rate deals is that you can guarantee your payments won’t increase, however, if national mortgage rates fall below average, you could end up paying more over time, says money.co.uk.

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