There isn’t a yes or no response to this. It all relies on your personal and financial circumstances.
If you are planning on purchasing a home, you may be curious about how house prices will likely develop and whether this is a good time. But no one can predict perfectly how housing prices or interest rates will alter over the coming months or years.
Before making any significant decisions, it is crucial to consider the larger picture. Because buying a home is a long-term investment and probably the biggest expense you will ever encounter.
State of the UK Property Market as of November 2022
Although the housing market has gained momentum recently and prices have increased, the affordability of goods and services for people has been impacted by rising mortgage rates and a 41-year high cost of living in October 2022.
Budgets for housing are currently being stretched and are declining. Property sales have decreased by 28% in the past year. Moreover, the price growth of properties in the UK is slowing down. According to Halifax, house prices have fallen to £285,579 in November, compared to £292,598 in October.
So do you buy the price drop, and wait for it to fall further? Or do you take the gamble, purchase now and expect the value to grow over time? Confusing times, yes, we agree.
When should I buy a house?
Let’s look at some of the instances that will be safe for you to enter the property market.
When Your Debt Is Under Control
If you are debt-ridden, it is perhaps not the time. Be it credit card debt, student loans, or another kind of debt – it is dangerous to get more loans in the name of the mortgage.
However, that’s not the case if you have the funds and are debt-free. Because then your risk is low and may be a good time to consider a house purchase.
Your Credit Score Is Good
Your ability to obtain a mortgage is significantly influenced by your credit score. When you’re just starting in your profession or have just gotten out of college, it’s typically lower. The credit score will rise as you reduce debt and establish yourself as a reputable borrower.
Most mortgage companies have different lending policies. For example, you could get a mortgage with a credit score of 600. But you might be subjected to a higher interest rate depending on the lender, and how they prioritise things. Read this article for a vivid picture of credit scores and the possibility of obtaining a mortgage.
You Have A Reliable Source Of Income
To be able to pay your mortgage on time each month, you must have a steady source of income. When determining how much money the bank will lend you, your income plays a definitive role. There is no set minimum income requirement for purchasing a home.
But there are ways to determine whether you have enough cash flow to qualify for a loan. The debt-to-income ratio (DTI) is used by lenders to assess whether debtors can take on extra debt.
Regarding DTI, there is no set standard, however mortgage lenders normally favour borrowers with DTIs under 50%. But similar to credit scores, this too will vary.
You Have A Steady Lifestyle
Purchasing a home is a significant decision that requires a long-term commitment, often involving a mortgage that lasts for 15 to 30 years. You may be prepared to purchase a property. But it is wise to do so if you believe you might want to settle down. Meaning if you want to establish a family, or remain in one place for at least a few years.
It is important to note that unmarried and even married couples might have to qualify with additional factors to obtain mortgage approval. As in life, more than one makes a difference in mortgages too.
You Need More Space
If you’re single or sharing a home with a partner, a one-bedroom apartment can be the perfect fit for you. But do you have kids or do you intend to start a family? A solid reason to buy a house is if you believe you need additional space. Even one additional bedroom will have a significant impact now and in your later life.
How do I know if I should wait to buy a house?
You Don’t Have An Emergency Fund
When you own a home, you are responsible for repairing anything that malfunctions. Without an emergency fund, you can find yourself unable to pay your bills. Before you consider obtaining a mortgage, you should ideally have an emergency fund that can cover at least three months’ worth of living expenses.
You Have A Lot Of Debt
Although you don’t have to be debt-free to purchase a home, having too much debt can make obtaining financing challenging. Having additional debt can also raise the cost of your loan since you won’t be as likely to get the best interest rates. Before taking on a monthly mortgage payment and all the associated costs of housing, make a plan to pay off your debt.
Your Income Isn’t Stable
To buy a house you must have a steady and secure income. You can predict how much money you’ll have coming in each month if you have a stable career.
You might not be prepared to purchase a home if you recently started your job or are considering switching careers soon. Before committing to a mortgage loan, wait until your work is secure and you feel at ease.
However, if it is for more than one person, you’ll be fine if the combined income is stable enough.
So, should I buy a house or should I wait?
If you want to keep your deposit until interest rates come down, then you should wait until they peak. You can expect an interest rate drop in mid-2023. But predictions are just predictions. We still have 6 more months for an unexpected turn of events to spoil the “party”.
But here’s the other side of low-interest rates. Buyer demand will increase, and everyone will try to get their hands on a lucrative offer. This means additional competition (ever heard of the term gazumping?) and it will be difficult to put a successful offer through, at your desired budget.
And in case you don’t have a deposit ready, it will take a few more years for you to be able to throw in the money. But will good homes wait? Absolutely not.
That is precisely where Adjoin can help. We, Adjoin homes, believe that it’s always a good time to buy a house as long as you use the right strategies and make the right decisions.
Our rent-to-buy option is simply the best a future home buyer could now get. You find a house you want to live in now and you jump in for a test ride. That is, you rent and experience the living conditions before deciding if the property is for you.
After some time, if you think that’s your “forever” home, you are the first in line to buy it. If not, you look for another home and repeat the process.
Does that sound interesting? Let us tell you more about the perks of Adjoin Homes.
Join our waiting list and drop us a line at email@example.com. We will get in touch with you soon and clarify everything ;).