Insights

Should prospective first-time homebuyers consider postponing their house purchase?

If you’re in the market for your first home but concerned about fluctuating mortgage rates and housing costs, here are the arguments in favour of and against initiating a home purchase in the current real estate market.

Arguments in favour of delaying your home purchase:

  • Mortgage rates have experienced a notable increase in the past year, rendering borrowing costs for home acquisition significantly higher.
  • A prevailing viewpoint suggests that housing prices will experience a decline in the next two years. Consequently, those who make a purchase now risk witnessing the value of their primary residence plummet.
  • If you’ve made a relatively modest down payment and property prices decrease, the potential for negative equity arises. This concern, however, would only materialise if you were to contemplate selling your property.
  • Should the projected downturn in housing prices materialise, delaying your purchase might mean requiring a smaller mortgage loan, potentially accompanied by a reduced minimum deposit demanded by lenders.
  • Opting to reside with family, thereby bypassing rent payments, could facilitate savings for a more substantial down payment. This, in turn, would enhance the equity in your home upon eventual purchase and enhance your eligibility for more economical mortgage arrangements.

Arguments against delaying your home purchase:

  • Homeownership eliminates concerns of landlords escalating rent or providing abrupt eviction notices.
  • Transitioning from a rental abode to homeownership entails channelling payments into your own mortgage rather than contributing to someone else’s.
  • While prognostications about housing prices abound, the exact extent of potential decreases remains uncertain. Consequently, waiting for prices to hit rock-bottom might entail a prolonged wait.
  • While a notable decline in property prices is expected, delaying a purchase could impede your chances of securing a more affordable mortgage.
  • If your intention is to inhabit the property for a minimum of three years, you might be able to weather the anticipated downturn in housing prices.
  • A substantial initial deposit reduces the risk of encountering negative equity.
  • The present juncture could present a favourable opportunity for discovering bargains. As sellers seek expedited transactions before impending rate hikes, being a first-time buyer might confer a strategic advantage due to the absence of a property chain that could impede the process.

We have expert solicitors who can help you sell/purchase or re-mortgage your home. You are welcome to use our free calculator to give you an estimate of our legal fees.

*This article is not legal advice but provides a general overview. The specific details of your case will determine the best course of action.