There Are Some Reasons To Be Cheerful About Buying A Home Post-Brexit

Says Property Journalist Sharon Dale.

It seems like every day there are new fears about what will happen to our economy post-Brexit and, as we are a nation obsessed by property, there is an enormous amount of speculation about house prices.

Some commentators say values may drop by five to 10 per cent. Then again, they might not, depending on how Theresa May and her team negotiate our way out of the EU and how the pound performs. All this uncertainty has upset many would-be buyers and yet there are still some reasons to be cheerful about purchasing a property post-Brexit. Here they are:
 

Interest rates are still low:


The Bank of England has held the main interest rate at 0.5 per cent, a record low, and it could go lower. This is good news for borrowers. Mortgage rates too are at record lows. The average five-year fixed rate is 3.14 per cent. At the time of writing, Yorkshire Building Society is offering a 10-year fixed mortgage with a rate of 2.89 per cent for those with a 25 per cent deposit or more. This product has an arrangement fee of £845. However, there are concerns that lending conditions may tighten, maximum loan-to-values will be cut and mortgage rates could shift upwards. First-time buyers should be mindful of this and act sooner rather than later. To be sure of the best deal find a good independent mortgage adviser – they can be worth their weight in gold.
 

Bargaining:


It’s summer, a time when the market is usually a little quieter and asking prices fall slightly. However, with Brexit as a bargaining tool you may be able to negotiate an even better deal. Homeowners may be pragmatic if they really want to sell and get on with their lives and many developers are willing to negotiate a little on price. Do ask nicely and explain the reason why you’d like a reduction. Under no circumstances demand a cut-price deal or the door to your dream home could be slammed in your face.

Reasons For Home Buyers To Be Cheerful Post Brexit
 

Help to Buy:


These government-backed schemes are still available and represent good value. The Help to Buy equity loan is open to both first-time buyers and home movers and is for new-build homes only. The buyer is only required to raise five per cent of the property value as a deposit. The government will provide a further loan of up to 20 per cent – this is interest-free for the first five years. This leaves you to fund repayments on a 75 per cent mortgage. In year six, you will be charged 1.75 per cent, which will climb at a rate of one per cent of that figure plus any increase in inflation. It is still a cheap way of borrowing money.

Better still, in these days of low interest rates, you can save for a deposit with the Help-to-Buy ISA and get free money from the government. For every £200 you save, you receive a government bonus of £50. The minimum government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy ISA before you can claim your bonus. The maximum bonus is £3,000 – to receive that, you need to have saved £12,000.
 

Supply and Demand: 


Demand for housing still outstrips supply and there is a view that this will continue to help prop prices up. Investors certainly think so and are not rushing to sell. Overseas buyers are also investing in Britain as the weaker pound gets them more for their money.
 

Equity:


Concerns about falling into negative equity are valid. However, this only happens if prices fall more than your mortgage deposit. Of course, if house prices have fallen and you want to sell, you will lose the cash you put into the property, but if you are buying a long-term home to live in, it should not be a problem. Any canny investor will tell you that property is a long-term purchase. If you have to move to relocate then you can always let your property out and rent a home yourself until the market recovers.
 

Publish date: 11/09/2017