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  Solicitors Bude Cornwall   Article - Are There Any First Time Buyers Out There? - 29 Nov 2008 Holsworthy Solicitors

The credit crunch has emphasised the importance of the first time buyer in the market place.
  The first time buyers’ absence from property transaction chains is part of the “mix” which is preventing sellers from moving on and the market is consequently stagnating.

The road to recovery for the property market will require significant efforts throughout the property industry and also a change in Government policy to revive the first time buyers’ ability to get on the property ladder. Currently the lending institutions and Government policy have done little to alleviate the situation. There are measures that could be taken e.g. the raising of the Stamp Duty threshold even further and the Bank of England’s policy on interest rates these will be watched closely over the next few months.

The current re-adjustment of property prices means that buying a property could now become more affordable as property prices are returning to a more realistic level. The increase in the costs of living however means that it is harder to save the deposit that is now needed to purchase in the majority of cases. Instantaneous property ownership for anyone with an income is now a thing of the past.

First time buyers should be given a climate in which they can decide whether to take the plunge and take advantage of the current buyers market. Advice must be readily available from Mortgage/Financial Advisers, Estate Agents and Solicitors alike to make the first time buying process more attractive.

Buyers must be made aware that more preparation will be needed by them and the decision to buy will have to be carefully calculated. It is not just a matter of borrowing it is coping with the repayments that has to be properly considered. To give a simple example if you were paying a mortgage at 4% interest then an increase to 5% would be stated on TV as an increase in the mortgage rate of 1%. If you are the mortgage payer then the amount you actually have to pay would have increased by 25%. The government need to facilitate a period of stability in the mortgage rates to limit the number of repossessions and to give confidence to us all.

The lack of variety of mortgage products may be a problem, however, by taking expert advice a first time buyer can assess the amount that will comfortably be loaned by a lending institution and how much deposit will be required before they consider buying. Borrowing from parents or family will be one option to raise the shortfall needed to purchase. Parents or family can all be considered by lending institutions as guarantors but must remember the risk to themselves. Buying with a partner or friend shares the burden of mortgage repayments as long as the correct legal advice is sought, these are valid options to get on the property ladder.

The Government is already committed to produce affordable housing and shared equity and shared ownership schemes can be considered by those on a low income. Over the last 5 to 10 years it is clear that property became regarded as an instant money making short term investment. In the current economic climate perceptions do need to change and first time buyers need to be reminded of the longer term traditional rewards of private home ownership. Those in rental accommodation should consider the long term ideal that instead of lining the pockets of a Landlord they could be paying into a mortgage for their future. More emphasis should be placed primarily on property being purchased to make a home and be considered secondarily as an investment for the long term future.

Here at Paul Finn Solicitors our Conveyancing Team is always ready to assist first time buyers. We will be pleased to give help and advice and we can answer your questions from the outset. Once the all important decision to buy has been made we ensure that the transaction goes through as smoothly as possible for you.
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