Have you been saving for a house for the past few years? Maybe you’ve started working on your credit score, maybe you started putting money aside for your new home, may be you even got pre-approval for a mortgage and had planned to start housing hunting in 2020. And then, coronavirus came into being. Now, the question on everyone’s mind is “Should I buy a house during the coronavirus pandemic?” While no estate agents anywhere in the world, be it an estate agents in Cheltenham or real estate agents in London, could give you a definitive answer to that question, let’s try to understand exactly how coronavirus has impacted the real estate industry and what the future holds.
The pros of buying a home during the coronavirus pandemic:
In order to improve buyer confidence, and boost the economy, banks and lenders are giving lower rates of interest during this pandemic. Low rates of interest could be a big advantage since they will drastically decrease the amount of money that you will spend on your new home. letting agents in Cheltenham, Leeds, Manchester and so many other cities have agreed that the number of people who are buying homes has increased specifically due to the decrease in interest rates.
Stamp Duty Holiday
The UK government announced stamp duty holiday until March 2021, which basically means that buyers either have to pay no stamp duty or a reduced percentage as stamp duty, depending on the overall cost of their homes. This has also led to an increase in the number of people buying homes, especially homes that are under £500,000. If you’ve been searching for properties for sale in Cheltenham on the internet, it might be time to make the most of the stamp duty holiday and start the process of buying your new home.
The cons of buying a home during the coronavirus pandemic:
It’s a seller’s market
Many sellers are fearful about putting their homes on the market, simply because they are unsure whether their home will sell or not. However, with lower interest rates, stamp duty holiday and almost a year of just savings with no real expenses, there has been a rise in the number of potential buyers. While the supply is low and the demand is high, the real estate market has now become a seller’s market. So, while you might get a mortgage at a low rate of interest, you might end up paying a premium for your new home because of the increase in demand.
Strict mortgage criteria
With the uncertainty of the future, lenders are now becoming stricter about their mortgage requirements. A high credit score is essential, but now lenders are looking at credit scores of 700 or higher. Also, some lenders have increased the down payment percentage from a mere 10 per cent to at least 20 per cent, while some may even ask for 30 per cent. These lenders have also become very strict about paperwork, your previous payment history, credit card bill payments and so on. Essentially, coronavirus has made lenders a little fearful because of which the mortgage criteria have become very strict.
What should you consider before buying a home during the coronavirus pandemic?
There are a few very important things that you must consider as a potential buyer. First, and most importantly, what is your financial situation like? If you do buy a house during the pandemic, will you be able to pay the mortgage comfortably? Secondly, what is the local market like? Is it a balanced market or are you paying a premium for your new home? Are the prices in the local market expected to increase in the coming years? And lastly, but equally important, can you accommodate for delays and unexpected road bumps? You need to ask yourself these three very important questions before making a decision.
In conclusion, the coronavirus pandemic should not define whether you want to buy a house or not. You need to take a look at your finances and your financial future to help you decide whether or not this is a good time for you to buy a new home. Keep in mind, if you’re thinking about buying this new property for personal use, or as a long-term investment, then there is no time like now. However, if this new property is a short-term investment where you’re thinking about reselling in the near future, then you need to make a well-informed decision before making the purchase. After all, buying a new house is a pretty big decision, so you don’t want to rush it.