by Sam Fox
With the announcement a little while back that the UK has now officially been placed into a recession, we take a look at the most commonly asked question we’re getting of late – is now a good time to buy?
What exactly is a recession?
To put it simple, a recession is when the economy stops growing for a period of time. Recessions are normal and inevitable, which can understandably make home buyers wary. But we are all in the same boat and can only help each other, this is why buyers need to be as confident as they can by steering any financial storms heading their way.
What does a recession mean for property prices?
House prices tend to decrease during a recession, therefore if you’re seeking a good deal on your next home, here’s what you might find:
• Existing homeowners may be willing to drop their asking price
• Existing homeowners may need a short sale to escape their mortgage
• Banks are likely to sell foreclosing properties
The housing industry plays a vital role in our economy, therefore, by decreasing the interest rates, the government are encouraging more home sales by making it inexpensive to borrow mortgages.
However, due to the unprecedented demand of homebuyers, seemingly unfazed by the current pandemic, with a desire to buy their next home,house prices seem to rest on solid foundations during the Covid-19 outbreak which is positive for any Homemover or First-Time Buyer across Warrington.
Purchasing a house during the recession can result in scoring an excellent value on your home that may have been unseeable during a better economic state, however you have to be mindful of securing stable employment and a strong motivation to complete research and pay for the inspections on any property you purchase.
Regardless of a recession, before you buy, you need to be honest about your finances and what you can afford. Paying your mortgage and waiting for the down-turn is just as important as finding your dream home at a low cost. Here’s a few things to be mindful of when finding your next property:
*Be wary of down valuations – where there is uncertainty, lenders may down value the property you’re looking to buy. You can still purchase at the agreed price, but it means your deposit would need to make up the short fall.
*Property surveys may take much longer than usual – With the housing market so busy t the moment, surveyors are undoubtedly under a lot of pressure to get around to carry our a survey, so it could take a little longer
*Underwriting processes are slower than usual – it’s no surprise that with the majority of staff all working from home, underwriting your mortgage application is taking longer too, with some cases taking up to 14 days before an underwriter looks at your case!
*Mortgage Products may be limited – depending on your deposit size, you may have a limited amount of choices, especially if you’re a First-Time Buyer, you may need 10%-15% towards the property purchase, and that’s if the property doesn’t get down valued to!
Now more than ever, it’s time to keep connected with your finances and prepare your move so that any challenges ahead an be managed.
Reach out to our team to secure a plan and path your future home at Warrington Mortgage Centre