Some key considerations for first-time buyers
For most first-time buyers, the key thing to remember is the importance of buying sensibly. Only ever buy what you can afford, and gain a firm understanding of the risk involved, particularly when using a mortgage to part fund the purchase. And, let’s be honest, with house prices as high as they are, nearly all first-time buyers are using a mortgage.
Human nature nearly always means we want that which we cannot have, thus people often come to me when stretching themselves too thin financially. Changes following the mortgage market review mean the assessment of affordability is stricter, so it is essential that a mortgage is within the buyer’s financially boundaries not only at the time of purchase, but also in the future.
Interest rates are currently low, which favours the borrower, however that is arguably the reason why house prices are so high. It is important to remember that these rates will not remain low forever, and borrowers must ensure they are aware how a rise in interest rates will affect them, when such a rise is likely to occur and how they will go about coping after it does.
Young professionals with formulaic career progression may be able to accommodate greater changes in the future than someone whose income rises are more linked to inflation than promotion, but ultimately everyone’s circumstances are different and selecting the right mortgage is imperative to facilitate the purchase now, and also to ensure there will be as few financial challenges as possible in years to come.
Many people tend to look only at the short-term, and either struggle to or completely ignore the need to consider possible changes, problems and alterations in circumstance further down the line. When these challenges do eventually come, as they surely will for many who take the plunge and decide to purchase a house, there is nothing that can be done; we cannot change the past, and it is only the actions of today that will influence how we cope in the future.
Only by incorporating sensible planning now can the journey to full home ownership and being free of a mortgage be a smooth road filled with as few potholes and pitfalls as possible.
Everyone should be aware that the value of investments can fall as well as rise, and you may get back less than you invested. Also, your home may be repossessed if you do not keep up repayments on your mortgage.
If you are contemplating opening a Help to Buy ISA, or would like additional guidance relating to growing your money, then you could benefit from speaking to an independent financial adviser. To speak to a top-rated adviser in your area to ensure you are making the most of your money, search the VouchedFor database.