The short answer is it might be! It all depends on your personal circumstances and what you’re looking to buy. If you’re a first-time buyer, you’ll definitely benefit from the recent drop in house prices.
The average UK house price fell for the 5th month in a row in January (source: Halifax). If you’re renting and looking to get on the property ladder this is great news because homes are becoming more affordable. And first-time buyers don’t pay any stamp duty on homes up to £425,000, so the dream of homeownership is becoming more of a reality, especially when compared to the expense associated with renting these days.
If you’re already a homeowner and you’re thinking about upsizing or downsizing in 2023, there’s rarely a bad time to do it. Crucially, there’s a lot less competition out there at the moment. Gone are the crazy days of houses selling well over asking price, so you’re far more likely to get what you want. It is a relatively sluggish mortgage market right now due to a noticeable slowdown in demand. So in a bid to encourage home movers back to the market, we’re seeing some healthy competition between the lenders. This is great news for homeowners because lenders are reducing their mortgage rates to compete for business, despite the fact that the Bank of England Base Rate is expected to keep rising until the middle of this year, and peak around 4.5%.
If you’re a landlord or thinking about entering the buy-to-let market, 2023 could be a bumper year for you. With a fall in house prices and possibly interest rates as well in the 2nd half of the year, property returns could soon potentially become more attractive than savings rates.
What if my mortgage deal is coming to an end in 2023?
“Mortgage brokers are worth their weight in gold right now” - Martin Lewis (Money Saving Expert). With this much economic uncertainty, more and more people are using mortgage brokers to help them navigate this extremely challenging period. Homeowners shouldn’t be loyal to their mortgage provider if they’re not the cheapest. People shop around whenever their energy or insurance contracts run out, so you should do exactly the same when your mortgage deal is coming to an end. You can start looking around up to six months before your mortgage expires, so find a good broker in plenty of time. Most mortgage offers are valid for around six months, so don’t leave it till the last minute. And even if rates drop after you’ve received your mortgage offer, your broker can still contact the lender and reduce your offered rate, right up until the date of completion.
Top three tips
Instruct a dedicated mortgage broker who covers the whole of the market. Some brokers are tied to one particular lender, meaning they can only offer you mortgages from that bank or building society. When buying a house or remortgaging your existing property, it’s always advisable to shop around to find the very best deal for you.
Consider a variable rate instead of a fixed rate mortgage. The cheapest variable rate mortgages are currently around 1% lower than the cheapest fixed rate products. This can make a huge difference to your monthly payments. The Bank of England Base Rate is the highest it’s been in 14 years, but it’s predicted to start reducing again later this year. If you’re on a variable rate mortgage you’ll pay less every month if rates come down. And there are no tie-ins with most variable rate products, so you can fix at any time if you need that peace of mind.
Always make sure that your home and your family are protected by taking out life and critical illness insurance policies. Your car is insured, so why not your house and your life? Most mortgage brokers can help you with this. There are no contracts or tie-ins with protection policies, so if they’re a few years old it’s definitely worth getting them checked. And they’re often a lot cheaper than you think!
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James Homer
Apex Mortgages and Protection
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