The big question on everyone’s lips at the moment, whether they are looking to invest in the property market or find their new home… Should I buy a property?
With a market that has seen so many ups and downs over the last 3-4 years, it is understandable that buyers are becoming more cautious when considering their next step (or maybe even their first step) on the property ladder.
Kirstie Philpott’s series of residential property blogs “Should I buy a property?” answers your questions about buying property in today’s market, including where to get started, what considerations you should make before offer and how to assess your financial position. The series looks at all property types including houses, flats and new builds.
It is a worrying time for everyone with a mortgage at the moment, especially where their fixed rate term is coming to an end or where they are already on a variable rate.
Your New Mortgage
You should speak to your mortgage broker about the impact of rate changes during the term of your new mortgage. They should provide you with the monthly sum payable during your fixed term period, while this sum may be more manageable, you should still plan for the future when your fixed rate term will inevitably come to an end. Your mortgage broker should also provide idea of what you would pay on a variable rate, this should show a sliding scale of potential future changes to the base rate, to which the variable rate is linked.
Your mortgage broker is your best friend when it comes to managing your mortgage product during your period of property ownership, but they do not conduct changes in the market and cannot work miracles. They can only put forward options based on what lenders at the time are offering, so you should ensure you can budget for those costs.
Future Market Changes
When your fixed term comes to an end with a lender, they will automatically switch you to their variable rate. A variable rate is a rate fixed by a lender plus the Bank of England’s base rate. Mortgage rates have been increasing because the base rate has been increasing in an attempt to combat the rise in inflation. To avoid being switched to a variable rate at the end of your fixed term, you should diary to speak to your mortgage broker a couple of months before the fixed rate term ends. Your mortgage broker should be able to help search for a deal to best suit you.
There is no way of knowing what the market is going to look like in the next 2 years, 5 years or 10 years, so it is vitally important you remain vigilant as to interest rate changes and how this may impact your budgeting during the term of your mortgage. If you encounter issues in keeping up with your mortgage payments, you may need to consider other options such as mortgage holidays (if your lender offers them), help from family or friends, lifestyle changes to accommodate additional costs or even selling the property to redeem the mortgage in full.
If you require any further information, please contact our Residential Property Team on 0345 646 0406 or fill in our online enquiry form and a member of the team will be happy to assist you.