It’s been over a year now since we all felt at least some impact from the Covid-19 pandemic. Not only has it impacted on our general health and mental wellbeing, but it’s also bit many of our finances too. Many businesses have been forced to close resulting in job loss or reduced income for millions of people. I suppose it was only inevitable that there would be a knock on effect on the property market too. People who had been planning to sell up and move last year have, in many cases, put their plans on hold in the hope of more stable times to come.
The effect of Covid-19 on house prices
With many people holding off selling their properties during the pandemic, it was inevitable that house prices would go up, and that’s pretty much what we saw across the board. Less properties on the market often results in a boost in house prices, as the lack of competition means that there is a smaller number of properties available to potential buyers. It has definitely been a sellers’ market.
Buying a house can be incredibly daunting and confusing, particularly for first time buyers. There are lots of questions to be answered when you’re looking to buy a house.
How much mortgage can you afford?
During the pandemic, interest rates in the UK fell sharply, which was great news for house buyers. A lower interest rate means that you’ll pay back less and it can make a big difference to the affordability (ie. how much you can afford to pay towards your mortgage each month).
One of the best ways to figure out how much you can afford and how much a mortgage is likely to cost you is to use a mortgage calculator.
A popular option when buying a new home is to get a fixed rate – this means that you will know exactly how much you will be paying each month for the duration of the fixed term deal. Often, these deals will last for two or five years, so locking in a deal now whilst the interest rates are low is a really great way to bring the mortgage costs down, making buying now a really attractive time.
The great thing about using a calculator like this one, is that you can play around with the figures to see how much your mortgage payments would increase when interest rates inevitably rise again. Of course, at the end of your fixed rate, you might be able to lock in a new deal, but it’s always good to be prepared.
What can we expect to see in the next 12 months
It’s difficult to predict what will happen over the next 12 months. Nobody could have predicted how 2020 was going to pan out! Some say that property prices are likely to continue to rise, whilst other experts predict a fall over the next twelve months. Each would benefit different people in different ways. For example, homeowners would be glad to see a rise in house prices, whilst first time buyers would find it easier to get onto the property ladder if house prices were to fall.
Whichever way the property market goes over the next year or so, it really is important to work out your finances and be sure that you can afford to make that move. Make use of the free resources available online to work out your figures and be sure that you aren’t stretching your finances too far. If you do decide to take the leap and move house, then you could always opt for a house that needs a little updating as these are often cheaper to buy.
