Is this the right time to buy?

House Beautiful (UK) - - Home Advice - PROP­ERTY FI­NANCE SPE­CIAL­IST Me­lanie Bien Money ex­pert and founder of Bien Me­dia

We’re first-time buy­ers and with lots in the me­dia about house prices fall­ing, or at least not ris­ing at such a fast rate, is this a good time to take out a mort­gage? We’re wor­ried about neg­a­tive eq­uity.

First and fore­most your home is exactly that – some­where to live. If prices go up, that’s a bonus, but it shouldn’t be your pri­or­ity. Whether you buy now or not de­pends on your cir­cum­stances. The main is­sue is whether you can af­ford it. Lenders look closely at af­ford­abil­ity when de­cid­ing how much to lend, tak­ing into ac­count out­go­ings as well as in­come. They want ev­i­dence that you can af­ford your mort­gage now and in the fu­ture, when in­ter­est rates rise. The is­sue for many first-timers is that they don’t have much of a de­posit and if prop­erty prices fall, they may end up with a home worth less than their mort­gage, mean­ing they’re trapped and un­able to sell. But that’s only a prob­lem if you’re sell­ing – over time, prop­erty prices re­cover so you will find your eq­uity po­si­tion im­proves and you’re no longer in neg­a­tive eq­uity. It’s an­other rea­son why you should buy prop­erty for the long term, not in the hope of mak­ing a quick profit as that’s un­likely to hap­pen.

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