The property situation in the UK has been steadily rising for many decades now, but finally it seems slowing down and possibly the reverse happening. Currently the market is very unsteady, some experts predicting a slight recession whilst others saying it's merely a slight hold up before continuing to rise again. Either way it is making everyone a little nervous and more reserved than usual.
Due to the unease it is the perfect break for the opportune developer looking to jump on the ladder. As less people are investing, you will find more attractive offers that you can seize and capitalize on. However before you jump straight in and start manically house hunting, bear in mind the following factors first, and in particular the hidden financial costs that can ruin any potential development by sapping up the whole budget!
Firstly decide on a suitable mortgage that will allow the cash needed to buy a property and do it up, if necessary, but does not cripple you with excessive repayments. As a general rule of thumb the mortgage repayments should be less than 35% of your total monthly income. Remember mortgage lenders will generally lend about 3x your salary, however if you opt for a joint mortgage it is possible to get approximately 2.5x your combined salaries.
According to recent figures, first time buyers are priced out of 80% of the towns in the UK. This is a very daunting statistic for any first time buyer, which explains why more and more are opting for help from another party, be it a family member or friend. Teaming up can make investment much safer, easier and less stressful especially making redevelopment less work. Unfortunately more often than not will cause disagreements and in the worst possible scenario a complete break up between both parties. In any case it is essential to draw up a valid, detailed contract that clearly states what happens if one partner wants out.
There are many mortgages available, from many different lenders, tailored to suit different peoples needs. If you are not an expert, it is worth seeking an experts advice, the advice received should outweigh the cost of choosing the wrong mortgage and being stuck with it. One simple point to note is that, the more deposit you can lay down initially, the better mortgage deal you will be able to negotiate. Also remember to take into account additional factors such as the interest rate, lock-ins and redemption penalties.
Whilst going through the process of purchasing an 'average' house, worth approximately 217k the purchaser will incur approximately 4250 of additional costs, including:
Mortgage arrangement fee
Land registry fee
Solicitors fee
Stamp Duty
Valuation service (from lender)
Structural building survey
And on top of that building and contents insurance is a definite must. Considering most developers thinking about refurbishing a property, to add value, need to keep costs down to a minimum, this could seriously affect the rest of the budget.
However with careful and thorough planning and a sensible budget, there is no reason not to invest in your first property. What's more Deputy Prime Minister John Prescott has recently revealed the government has set aside 600m to fund cut price housing to help first time buyers. In conclusion I say do not hold back, in fact use these unsettled times in your favour, make the lenders compete to win your custom, find the perfect first time investment and jump straight on the property ladder!
