Mortgages in the UK in 2023
2023 may not be considered a good year for mortgages but that’s not to say you shouldn’t consider applying for one. A lot will depend on your personal circumstances and how much disposable income you’ll have after making your monthly loan repayment.
We can’t be sure what will happen with interest rates over the coming months but we can assume they will rise a little more. This leaves home buyers with a quandary. Do you buy now and lock in a lower rate or do you wait it out and see what happens?
The UK Rental Market
It’s likely that you’re paying as much if not more to rent a property in the UK. Landlords are able to name their price in the current climate which has led to bidding wars in some areas. Renting is a great short term solution and in some cases it’s the only solution, but if you have a mind to purchase your own home at some point, renting can seem like a bit of a money pit.
Five Questions to Ask Yourself before Buying a House
Can I afford it? This may seem like a simple question. ‘Yes, of course I can afford it!’ But being able to make the monthly repayments comes down to other factors. How much is your food bill every week, electricity, gas, broadband? Are those bills likely to rise given the current climate? How much will you have left over if they stay the same? Will you be able to manage if they rise?
Do I Have a Deposit? In general, you will need at least 5% of the value of the house. 100% mortgages are available, but in some cases you may need a guarantor. This is someone that agrees to cover the repayments in the event that you can’t. You will also find that your monthly payments are higher. On a £200,000 for example, you will pay an extra (approximately) £60 p/m.
How is Your Credit History? Do you have a good credit history? You may think ‘That’s fine. I have never had any credit so it’s all good’ but this is not the case. Having no credit means there is no evidence of your ability to pay back a loan. Banks need to be able to evaluate the risk and if there is nothing to go on, they won’t take that risk.
100% Loan Example: Skipton Building Society has launched its 100% “Track Record Mortgage”. It’s available to first-time buyers only, aged 21 years old and over, who have a provable track record of renting for at least 12 months in a row during the last 18 months and a clean credit history.
In any case, it’s always worth talking to a mortgage broker about 100% mortgage options as each lender has it’s own policy.
If you have any questions regarding applying for a mortgage in the UK give us a call or send us a message.