Is now a good time to buy property in 2021?

The past year will no doubt go down in history as one of the most turbulent and tumultuous, and unfortunately this shows no sign of letting up. Despite this uncertainty, there are some promising signs that 2021 could be a good time to buy property.

The UK housing market has seen many changes over the last 12 months, with the freeze on house moves in the first lockdown to the rapid rise in house prices towards the close of the year. Contending with COVID-19, Brexit and changes in the economy will continue to have an impact on the housing market, and subsequently house prices.

During the closing half of 2020, the UK property market experienced something of a boom, which shows no signs of slowing down. So, is now a good time to buy property in 2021?

What about house prices?

Property sales towards the end of 2020 were at record levels, contributed to by the temporary stamp duty holiday, which will expire on the 31st of March. However, something to bear in mind is the end of the furlough scheme in April which may cause an increase in unemployment.

Sales activity for housing is expected to slow down slightly in 2021, with the growth in house prices likely to be more subdued. Rightmove has predicted a 4% national average growth in house prices in 2021. This notion has been echoed by many surveyors.

The most reliable source of data for house prices is the Land Registry’s UK House Price Index, which is based on sold properties.

The Land Registry’s latest data from November 2020 shows the price of property in the UK increased by 1.2% month-on-month and 7.6% year-on-year to reach an average of £249,633.

However, latest figures from Halifax Managing Director Russell Galley show that British house prices fell last month for the first time since last May, which may be a sign of the uncertainty the pandemic has caused.

Some experts have also warned that housing market activity and prices may fluctuate after the stamp duty holiday ends, which may see a sales slump as many buyers may need to lower their offers to account for higher tax bills, which may add pressure to property prices.

What about the property market?

The property markets across England, Scotland, Wales and Northern Ireland are open, and estate agents are conducting virtual viewings where possible. Buyers and sellers are still allowed to move house, in-line with the government’s latest guidance.

Once you have conducted a virtual viewing, if you find a property you are serious about buying, you will be able to have an in-person viewing. Viewings must comply with social distancing measures and you must wear a face covering.

The rise in the UK property market in the last year can be attributed to the temporary cuts to stamp duty made by the government. The cuts vary between each country, but buyers could save up to £15,000 in tax if they move house before 31 March this year.

In the short-term this may cause a rise in house prices, especially on properties in sought-after areas.

The impact of COVID-19 and Brexit

The impact of Brexit on the UK housing market is unlikely to be felt in the short term but the longer-lasting effects are as yet still unknown.

Another uncertain aspect of the UK housing market is how COVID-19 will continue to impact the country and the economy. The introduction of the vaccine roll-out is likely to bring confidence to the housing market as we slowly return to ‘normal’

Despite the uncertainty of the year ahead, the UK property market will likely remain stable throughout 2021, and it could be a good time to apply for a mortgage or move home.

The Office for Budget Responsibility published its findings back in July which predicted a fall in house prices by 3.8%, you can read their full report here.

Changing priorities and mortgage availability

The pandemic has caused unprecedented demand for house moves, leading to a record year of property transactions. Successive lockdowns and uncertainty have led many homebuyers to reassess their priorities, such as the requirement for more space and better internet connection.

The base interest rate is likely to remain the same in the short term, which is expected to keep mortgage rates down. If this trend continues throughout 2021 it will remain an attractive time to purchase property.

For a limited time New Cross Central are offering flexible payment terms, with a £250 reservation fee and 5% deposit on exchange of contracts after 60 days. Get in touch with us for more information.

How to buy your first home in Manchester

For first time buyers, the prospect of buying your first home can seem daunting, and often out of reach. Here we’re going to explore the options, set out what you need to do and show you what help is available to get you on the property ladder.

Buying versus renting

Choosing whether to buy or rent can be a tricky decision, there are pros and cons to both. 

One major benefit of buying a home is the freedom to decorate and make any changes you want to without having to answer to a landlord. Another pro is that when you buy an apartment  your monthly payments are going towards something you will eventually own, making you the beneficiary rather than a landlord. 

Saving for a deposit

In order to buy your first home you need to save a deposit. In most instances, the minimum deposit you’ll need to save is 5% of the total cost of the property you want to buy. However, the bigger the deposit you can save, the wider range of mortgage deals will be available to you. This is because the larger your deposit, the lower the risk you are seen to be to mortgage lenders.

House prices are continuing to rise in the current market, and buying a house can begin to feel like a pipe dream, with paying rent feeling like the easier option. Luckily, there is some government help available for first time buyers. The Help to Buy Equity Loan and Lifetime ISA options can both boost the savings you already have. 

To give you an idea what a 5% deposit looks like, if you want to buy a home costing £150,000, you’ll need to save at least £7,500.

A Help to Buy ISA is a bank account that helps first time buyers grow their savings to add to bonuses to their deposit. First time buyers can save up to £200 a month with a Help to Buy ISA and the money will grow tax-free, and when you come to being ready to buy the government will top up the amount you’ve saved by 25%. 

With a Lifetime ISA you can save up to £4000 a year and the government will add a 25% bonus annually. 

Mortgages

Unless you are in the fortunate position of being able to purchase a property with cash, it’s most likely that you will need to get a mortgage. 

In simple terms, a mortgage is a particular loan from the bank or building society against the property you want to buy. The borrower then pays back the loaned amount in addition to the interest accrued. 

Research is key when looking for the best mortgage deals. Searching the best mortgage rates online is a good place to start, check out comparison sites and consult a mortgage broker, who may be able to access more competitive deals not available through regular research. Speak to a member of our team today for free independent financial advice.

Our Independent financial advisor will be able to advise you on:

  • The size of your deposit required
  • Affordability
  • Interest rates 
  • Which types of mortgages are available to you
  • And be able to answer any question you may have

Rigorous checks are also in place by lenders to ensure you can keep up with your mortgage payments, particularly if the interest rate rises or your circumstances change. 

Ahead of getting on the property ladder you’ll need to show proof of earnings and incomings and outgoings, such as household bills and other living costs, You’ll also need evidence of your financial profile, including bank statements and pay slips.

Different types of mortgages

Some of the most common types of mortgage are:

A fixed rate mortgage: This means the interest rate will stay the same for a particular length of time. Once that term comes to an end, you’ll be transferred to the lender’s standard variable rate (SVR) This mortgage is particularly attractive for first-time buyers as it offers stability and safety, however they tend to be more expensive as you’re paying for additional peace of mind.

Tracker mortgage: Typically follows the Bank Rate, the benchmark interest rate set by the Bank of England for a certain period. It’s a variable rate, so your monthly repayments can change. If the Bank Rate increases, so will your mortgage payments.

Discount mortgage: Interest rate is tracked at a particular discount to the lenders SVR for a particular length of time. Therefore the rate will vary. Normally, the steeper the reduction, the shorter the period of discount will be. 

Standard variable rate mortgage: Normally doesn’t include any deals or discounts. Most are advised to move away from this type of mortgage at the earliest opportunity to find a cheaper alternative.

Guarantor mortgage: Getting on the property ladder can be tough, which is why a growing number of lenders are offering mortgages that allow parents to contribute. A guarantor mortgage allows family members to pay the mortgage if you are unable to.

Offset mortgage: Allows you to link your current and savings accounts to your mortgage. Good for saving money as it only charges interest based on the net balance.

Remember to budget for the other costs of buying a home

Mortgage payments may seem like the biggest outgoing when buying your first home, but there are other costs to take into account. 

These include:

  • Survey costs                       
  •  Solicitor Fees                      
  • Removal costs                     
  • Buildings Insurance 
  • Furnishing and decorating        
  • Mortgage arrangement fees 
  • Home Insurance

 

What is Stamp Duty?

Stamp Duty is a land tax you pay on your home . The more valuable your house is, the more Stamp Duty you pay. 

In England and Northern Ireland it’s called Stamp Duty Land Tax.

In Wales, Land Transaction Tax.

In Scotland it’s known as Land and Buildings Transaction Tax. 

An important note is if you buy a property on or before 31st March 2021, you won’t pay any Stamp Duty on properties costing up to £500,000.

Clean up your current account and check your credit score

Prepping your current account ahead of submitting your mortgage application is key to ensuring mortgage brokers look kindly on you. How much you can borrow is determined by your mortgage lender who will do an affordability test based on your monthly incomings and outgoings. 

A good tip is to go through your current account at least six months before you make an application and identify for yourself where your money is going.  Expensive gym memberships, shopping habits or a tendency to end up in your overdraft at the end of the month will all have an effect on your finances. Try and curb what you can before the lender starts looking to better your chances of getting a good mortgage deal. Having a  good credit score is also an indicator to a lender you are a reliable borrower when they are assessing your mortgage application, so be sure to do your research about how to improve your score. 

Talk to your family

Getting on the property ladder can be tough with no help, and you may be lucky enough not to have to go it alone. The Bank of Mum and Dad was recently considered the sixth biggest lender in the UK mortgage market because so many parents are helping their children out with their first home.

Families can help without having to surrender their savings. Many mortgage lenders now offer products aimed at people whose families are in the position to help them out.  It’s worth exploring your options with a mortgage broker if this is something that is available to you.

Find your perfect home

Striking the balance to find the best first home can be a big decision, and making the choice between city life and the suburbs can prove tough.

New Cross Central homes provide the best of both worlds, spacious and airy places with all the benefits of life in the city centre.

Find out more about owning your home at New Cross Central.