Is now the right time to get on the property ladder? A mortgage adviser’s tips for first-time buyers

The year in review

I think it’s fair to say that 2023 has not been ideal for the first-time buyer. Interest rates are high when compared to previous years¹, affecting the amount you’re able to borrow and meaning that you get less for your money in today’s mortgage market.

This has naturally caused many of those that may have been thinking of getting a mortgage on a property to stop and reconsider; while it’s a very exciting prospect, it’s a huge financial decision and you need to be sure that you think clearly, without letting your excitement cause you to jump into anything too quickly.

With this in mind, I am sharing my thoughts on whether now is the right time to buy, to help you think about if you should look for your first home now, or whether waiting may be the best option for you.

The power of waiting

It’s completely understandable to want to wait before taking the plunge and getting your first mortgage – it has been predicted that the amount of lending for house purchase mortgages in the UK will have shrunk by 23% this year compared to 2022², so you’re certainly not alone. Interest rates are at a 14-year high³, making your monthly payments more than they would usually be and meaning that your budget likely won’t stretch quite as far as it normally would do.
As I said above, buying your first home is a huge financial decision – likely the biggest of your life so far, probably one of the largest you’ll ever make – and rushing into it when you’re either not comfortable or not sure is never something I’d advise.

It may never be the ‘right time’

Having said that, the mortgage market is never “perfect” for buyers and if you’re waiting for the stars to align before making your move, you could be waiting forever. My recommendation will always be that if you tick the following boxes:

• You have your deposit saved
• You can afford your repayments
• You have found a lender
• You have found a property you can see yourself living in

then go for it. Sure, there may technically be better times to buy, but if you’ve done your research into what your budget is and what you can borrow, and you can comfortably afford your monthly repayments, then why wait? The sooner you get on the property ladder, the sooner you can start eating away at your mortgage and the quicker you’ll be able to pay it back.

Making the mortgage process as smooth as possible

When it is your time to buy, here are my top tips to help you make the mortgage process as smooth as possible, so you find a solution that is perfect for you and your needs.

Enlist the help of a broker

With a mortgage broker, you could have access to not only more impartial advice, but potentially access to more lenders and mortgage product options. A broker will take the time to get to know you and your situation in-depth, so they can give you advice and guidance tailored to what is best for you.

Consider what mortgage product would be right for you

All mortgage product types have advantages and risks, so I would advise weighing them all up and considering which one is right for you:

Tracker rate mortgages will increase and decrease in line with Bank of England base rate changes. The risk is that there is no limit on how high rates could go, so from a budgeting perspective it could be tricky, but the flip side is that, as rates decrease, so will your monthly repayments.

Fixed-rate mortgage products fix your interest rate at a certain amount for a set period of time, usually 2, 3, 5 or 10 years. If you fix your mortgage and rates decrease, you will be fixed on the old rate prior to the decrease and won’t be able to benefit from the lower rate. However, many homeowners like the fact that, despite the risk of paying more, their payments stay the same and are much easier to budget around as a result.

Make sure your repayment commitment is sustainable

It’s so important to do your research and understand your financial situation and capabilities – essentially, consider your borrowing and if it’s realistically affordable. If you’re on a variable rate product, make sure repayments would be manageable not only for the current situation, but also in the event of an interest rate increase. This can help to give you peace of mind that you’ll still be able to afford your monthly payments, even if the market fluctuates.

Be prepared to act quickly

Lenders have withdrawn rates without notice⁴, meaning from a borrower’s perspective they could be missing out on rates whilst getting paperwork organised. Make sure your name and address are up to date on your ID, payslips and bank statements, as this can delay the submission of your mortgage application.