Buying A Home In
2008
So far David Kuo's predictions
for 2012 have had good and
bad implications for many
of us, and his third forecast
(which you can read by downloading
our free online guide) is
no different. With house
prices expected to stagnate
or fall while wages are
predicted to continue to
steadily increase, we could
expect to see the house
price to earnings ratio
improve for the first time
since 1995.
So come 2012, the average
British worker may no longer
need to borrow 7 or 8 times
his salary to buy an average-priced
home. In other words, houses
may become a bit more affordable.
Hurrah!
Of course, you may decide
not to wait till then. If
you have a decent sized
deposit saved up already
and know you can afford
to buy, why wait? After
all, we're talking about
buying a place to live,
not the latest frivolous
gadget. And heck, our predictions
could be wrong.
If you do decide to buy
now, here are some tips
to help you get real value
for money in the property
market. That way, if house
prices do fall, you hopefully
won't feel too upset that
you bought now.
Value for money
For a start, think long
and hard about where and
what to buy.
1. If you can afford it,
buying a property with an
extra bedroom will give
you the scope to rent out
a room. The government lets
us receive up to £4,250
tax-free in its Rent a Room
scheme in the 2007/8 financial
year (that's around £81/week)
making this a great way
to help out with the mortgage.
What's more, some lenders
will even take this income
into consideration when
making you a mortgage offer.
2. If you do decide to
buy, try to protect yourself
against having to sell in
the near future as if prices
come down, you'll suffer.
Think about what you need
- for example, good transport
links, a location near good
schools, a garden/garage/scope
to extend should all help
you stay put for the next
few years.
3. Make sure you shop around
for the best mortgage. Now
this is an important one
as it can potentially make
hundreds of pounds of difference
to you each month. Firstly,
read around and get a feel
for mortgage rates available
at the moment. If you're
a first time buyer you may
feel more comfortable with
a fixed rate mortgage -
you'll know exactly how
much you'll need to pay
each month which can give
great peace of mind when
working out that budget.
However, those with the
opinion that interest rates
may be coming down in the
future may decide to go
for a tracker deal in the
hope their payments may
reduce.
But remember, the rate
you pay can make a big difference
to your monthly payment.
For example, a 25-year,
180k repayment fixed rate
deal at 5% will mean payments
of around 1,052 each month.
Pay 6.5% and your payments
would be 1,215 that's an
extra 163 you'll need to
find each month.
4. However, don't just
be seduced by a low rate
that locks you in for years
after the discounted period
as it can cost far more
in the end. Likewise, don't
forget to take into account
the mortgage fees attached
to the different deals (check
out this article for a great
way to fairly compare deals).
5. If this all seems a
bit complicated and scary,
don't panic as help is out
there. For a start, if you
don't have a lot of time
to phone around or check
best buy tables, a broker
can be invaluable. You can
call them up to discuss
the best options for you,
and they can do the donkey
work too. And as some rates
are only available to brokers,
you could find yourself
with a better deal than
you might have been offered
directly.
