It’s safe to say many of us feel the pinch. The higher prices of goods and gas we buy from abroad have pushed inflation rates into orbit. To kerb the rise, the UK’s central bank has been rapidly rising UK interest rates over the past year as a bid to prevent the embedding of inflation in the economy.
The current inflation rate is 10.1%, but the Bank of England aims for 2%.
How does this affect you as a first-time homebuyer or when you sell your home? Or invest as a landlord in a new buy-to-let property?
Let our Ilford estate agents guide you through.
Mortgages
The Bank of England raised the base rate by 0.5 to 1.25% to target escalating inflation. This means homeowners on variable and tracker mortgages will soon see their monthly mortgage rates rising.
But what if you’re nearing the end of your term or getting your first mortgage?
Bank of England meetings scheduled for later this year are expected to lead to further base rate increases – making borrowing more expensive. Therefore, it is wise to look for a new mortgage plan now.
Overall, a fixed-rate mortgage is your best bet because rising interest rates in the UK will not affect your monthly payments during your term.
Compared to renting, buying a house costs more upfront but is more affordable in the long term. Monthly outgoings tend to be cheaper, and you get a sellable asset at the end of your mortgage.
Help to Buy
Are you buying for the first time? There’s still time to beat the Help to Buy deadline, but you’ll have to act quickly. The scheme ends on 31 October. With just a deposit of 5%, you can buy a new-build property.
You must be 18 years or older and cover fees, such as legal and mortgage. Next, find a property sold by a registered Help to Buy homebuilder that doesn’t exceed the maximum purchase price set for your purchasing area. For London, it’s £600,000.
You can borrow up to 20% of the purchase price of the property, and you do not have to pay interest rates on your house for the first five years!
Buying a new buy-to-let property
Buy-to-let interest rates follow the same path as residential mortgage loan interest rates.
To protect a new buy-to-let investment from rising inflation, which could lead to early tenancy terminations and thus void periods, do so in an area with consistently high demand from renters.
It’s a bonus if the area also has properties that do not cost an arm and a leg, but give healthy yields. A fantastic example is East and Central London which are popular areas among young professionals.
Check out properties before they leave the market, here.
Don’t let interest rates put you off moving home…
Autumn is fast approaching and is one of the busiest times of the year for the property market. When selling your home, you can list soon to get ahead of the rush and grab the attention of initial buyers to sell well before Christmas.
When buying, it can take time to find the right property. And with interest rates and thus mortgage rates rising in the UK, it could become more difficult to find an affordable mortgage, so it makes a lot of sense to act now.
If you are buying or selling a property in Barkingside or Ilford, our estate agents can help you kick start your sale with professional support from a team of locals. From offering a free valuation that reveals the market value of your property, to marketing that engages ideal audiences and investment advice.
Give us a call on 020 3972 7241 or email info@oaklandestates.co.uk.
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