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Helpful Advice

Push the Boat out to Buy

Push the Boat out to Buy

By Peter Barry

With rental prices continuing to outstrip the price of mortgage repayments on equivalent properties, there’s never been a better time for first time buyers to make that final stretch to get on the property ladder. According to recent research conducted by Halifax, it is now 16% cheaper to buy a house than it is to rent one. So whether it’s tapping solvent relatives for a loan, cashing in on shares and savings policies, or emptying the rainy day piggy bank and checking under the sofa cushions, it’s time to pool your cash and head to the mortgage adviser.

Fix for the future
The Bank of England interest rate has remained stagnant at 0.5% for long enough for many major mortgage providers to bring a whole new range of tempting offers to the table. If you’re worried about fluctuating repayments, you can choose to fix for two, five or – in some cases – ten years, for rates that were unheard of a few years ago. Which means, you can enjoy the security of knowing exactly what your monthly outgoings will be and budget accordingly.

With no signs of the base rate shooting off the scales for a good few years to come, banks now have the confidence to pass on more competitive rates to borrowers. In the past few years, new borrowers have had to sit by and watch while those on variable rates have enjoyed one of the only financial upsides of the recession. So, great news for those already with a foot on the ladder but bad news for first-time buyers, whose high-rate options have kept many of them out of the marketplace.

Check the small print
Whilst these new deals look great on paper, they’re still not all suitable for all prospective borrowers. Banks are still a little reticent about handing over bags of banknotes to borrowers with no repayment history, who want to fund properties that might not prove to be recession-proof. For this reason, the best deals often come with caveats that still keep first-time buyers at arm’s length from the best bite of the mortgage apple. There might be a prohibitively high fee or the interest rate might be based on a 40 or 50 per cent deposit. But, if there’s one thing that first-time buyers are good at these days, it’s saving. So, if you have managed to bank a decent deposit, you might finally see those years of living like an impoverished student come to fruition.