If you plan to make 2025 the year you buy your first property, then...fantastic! High interest rates, inflation and mortgage rates may have previously hampered your plans, or you may have still been saving for a deposit.
But with inflation, mortgage rates and interest rates all falling in 2024 and looking set to fall further in 2025, this could be the year your dreams come true. It remains a buyer’s market, which is good news for you, but what should you consider as you prepare for home ownership? Here are five tips to help you to clinch your first property.
Keep an eye on mortgage rates
Interest rates fell by 0.5% in 2024 and four further cuts to the base rate are expected this year. But they won’t instantly mean low mortgage rates. Even with the cuts in 2024 they still yo-yoed somewhat. Mortgage rates are predicted to fall to around 4% this year so you’ll need to weigh up whether you want to look for 2-year fixed rate or 5-year deal.
Bear in mind that mortgage costs will differ depending on the value of the deposit you have to put down. Typically, you will need to have saved at least 10% of the property’s purchase price. However, with the Government’s mortgage guarantee scheme, you can apply for a first-time buyer mortgage of up to 95% of the property’s total value.
Don’t forget April’s stamp duty increase
Another cost to consider is the change in stamp duty land tax charges which will take effect from 1 April. This is due to a change in the thresholds for which stamp duty is payable which were reduced in 2022 to try to boost the housing market. For first-time buyers, this threshold will change from £425,000 to £300,000. Although the average cost of a first home is still below £300,000 across the UK prices will vary by region.
Be prepared for a busy first quarter
The change in stamp duty thresholds is causing a rush of buyers looking to complete before April. This means more competition for properties but also increased demand for the experts you will need to help complete your purchase – whether that’s your agent, solicitor or mortgage broker.
Being ready to move by getting paperwork in order, as well as having all your experts already appointed, will give you a greater chance of completing before thresholds change.
Having an agreement in principle for your mortgage will also give you a clearer idea of how much you can afford to spend and is proof that you are serious about moving fast once you are ready to put in an offer on a property.
If your sellers are also trying to beat stamp duty tax increases this will help to boost your appeal as a buyer. Similarly, showing that you can physically move fast – such as living in short-term rented accommodation or with family or friends until ready to complete – also shortens the chain and the likelihood of a quick deal.
Do your homework
Finally, it’s important not to get over-excited in your rush to move. If buying has been part of your plan for a while, then hopefully you’ve had plenty of time research areas and amenities.
If not, then spend some time researching exactly what you want and the types of properties that are in your budget and suit your needs. Remember to keep a cool head at this stage – it’s easy to quickly fall in love with a property but you must ensure that you pick the right one.
For more information on how we can assist you on your sales journey, please contact one of our branches in Essex, London or Hertfordshire today. We also offer a free and instant online valuation to give you an idea of how much your home could be worth on the current market.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Sources:
https://www.moneysavingexpert.com/news/2024/12/base-rate-held/
https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
Approved by The Openwork Partnership on 17/01/2025
