Is now a good time to buy?

At a time like now, with the economy in a bit of a mess, potential homebuyers may be wondering if now is a good time to buy.

Well, as I discovered myself, the answer isn’t a simple yes or no, and buying a house now has a few advantages and disadvantages you should take a look at before you consider making a move:

Advantages

1. At the moment, the average house price is lower than it has been, so people looking to buy a house should get a bit more for their money, or get the property they’re looking for – for less. Mind you, it’s still important to search the market for the best deal, as some houses may be priced lower for good reasons.
2. With the base rate at its historic low of 0.5%, people who need to take on a mortgage in order to afford their house should benefit from the lower interest rates. Although the low interest rate is bad news for savers, people who are paying interest on their mortgage often find that their payments are lower than usual.

Disadvantages

1. No-one can accurately predict what will happen regarding future house price trends, so buying a house now could be a risky investment – for example, someone may buy a house for £150,000 and next year it could only be worth £140,000.
2. It is important that anyone looking to jump onto/move up the property ladder at the moment understands that mortgage rates aren’t entirely based on the Bank of England’s base rate. There are a number of other factors that mortgage providers take into account before deciding on interest rates.

Remortgaging

For people who already own their own home, but are looking to remortgage, the same kind of question may pop up – is now a good time to remortgage?

Advantages

1. Again, with the base rate at an all-time low of 0.5%, now may be a good time to remortgage. People looking to remortgage should be able to get a good deal at the moment.

Disadvantages

1. Because of the lower house prices, some homeowners may have less equity in their home – which means that they may get a worse deal (because mortgage providers tend to charge more when the mortgage they’re granting is larger – as a percentage of the house’s value).
2. Again, mortgage rates aren’t based entirely on the Bank of England’s base rate, so no-one can guarantee that they will get a low-interest deal. It all depends on the lender’s criteria and the situation of the homeowner looking to remortgage.

This entry was posted on Friday, November 6th, 2009 at 4:23 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.