With the property sales freeze finally over, is it really a good time to buy or sell?
With all the uncertainity of COVID-19, many people are asking whether it might be a good time to sell or jump on the property ladder for the first time.
Currently, interest rates are very low therefore if people can take advantage of this, it can be very beneficial. However, affordability and certainty of jobs/income needs to be factored into these big decisions as well. The following headings can help answer some questions that many may have surrounding the current state of the property market:
What is happening to house prices?
Knight Frank says prices may have dropped by 5% since lockdown. It forecasts a further 2% fall by the end of the year before they begin to recover.
Who could find it a good time to buy?
'Second-steppers' may find the discount on the larger property they wish to buy is greater than the fall in value of their existing home. Rob Houghton, chief executive of comparison website Reallymoving, says while negative equity is a risk for those who bought recently with small deposits, those who bought their first home more than five years ago can withstand any short-term price dip.
This could free up stock for first-time buyers, but they may find it harder to get a mortgage. The majority of lenders have cut offers for those with deposits of 10 per cent or less by more than 90 per cent. The current rule of thumb is that you need a minimum of 15% as a deposit for a purchase, however some lenders are intermittently introducing 10% deposit products.
Should I ask for money off the house I'm buying?
Buyers can renegotiate the price before contracts are exchanged. Many clients have sought discounts on their properties, some being successful in negotiating lower prices of 3% - 5%, however some have been unsuccessful.
Property expert Henry Pryor says a responsible approach should be sought. 'Just say: "Sorry, the deal doesn't work like it did before." 'This is about accepting the reality of a global crisis.'
Mortgage lenders may ask to revalue the property if a lower price is agreed. But if you pull out of a deal after exchange, you may be in breach of contract and vendors can sue for losses and could keep your deposit.
Will my mortgage be withdrawn?
Banks are reviewing offers to households whose circumstances have changed during the lockdown, and could withdraw deals even if contracts have already been exchanged.
This could lead to loss of deposit, anyone who has been furloughed since agreeing a mortgage may have to renegotiate their offer. You may have to take a small loan or a longer mortgage term.
Most banks have said they will count furloughed income towards affordability checks, but this varies from lender to lender.
Lenders are clamping down on borrowers using bonuses and commission to support their income, while the self-employed are also having their applications scrutinised in greater detail.
Should I hold off on selling my home?
The majority of banks have restarted physical valuations and property website Rightmove reported a 111% week‑on-week increase in new sales listings on the day the market reopened. This shows that the market is moving again and people are willing to sell and view houses if required, it all depends if you can get the amount you want for your house!
If you are having thoguhts of moving, buying a new home, selling or getting on the property market for the first time, we can help!
MWS Financial Advisers Limited are experienced and friendly. We have a knowledgeable team of advisers, who have a collective industry experience of over 100 years! So you can see the team that will be looking after you know their stuff! Contact Us Today for a free mortgage consultation!