Munch, munch goes the credit crunch, but first-time buyers could be at an advantage!

Everyone has heard about the credit crunch. Indeed, news of the UK being plunged into a recession has been hitting the headlines for over a year now, due to the increasing prices of essentials like fuel, food and electricity.

Interest rates have also been rising, and borrowers face a difficult time with higher repayment demands from lenders, coupled with significant changes in living costs. Looking at the statistics — personal debt is sitting at around ?1.3 trillion — it is a fact that the majority of people living in Britain have been, or will be affected by the credit crunch.

The mortgage marketplace is no exception, and many homeowners have seen their monthly repayments rise over the past year. And, because banks are tightening their lending criteria, it is becoming increasingly difficult to apply for such loans as mortgages.

However, it is not within the interests of the national economy to create a situation so dire that no-one can afford to buy properties. This is especially pertinent for first-time buyers, who are essential to the housing market.

And, although it is more difficult to secure loans, such as mortgages, the credit crunch is not all doom and gloom with some positive news for potential homeowners.

Particularly noteworthy is the fact that the average house price has decreased, so that after an extended period of inflated prices, new buyers now have a better chance of purchasing a property within a more realistic price bracket. Interest rates are also predicted to be lowered, which will have a positive effect on the overall housing market whilst mortgage fees have already been lowered.

Buyers do need to be aware though, that they are going to have to meet a stricter set of criteria. Advice issued to consumers includes making sure you’ve got your finances in order before approaching a mortgage lender, such as consolidating any existing debt, as well as getting rid of any credit cards that aren’t being used, since lenders tend to scrutinise your credit worthiness closely.

The mortgage marketplace currently has over 5,000 different mortgages, and it is therefore wise to shop around before deciding upon one. Whether you research the marketplace via the internet, search comparison websites, or speak to an independent mortgage advisor, it is essential you investigate what’s on offer.

Due to the flexibility it offers, and the money it can save, many recommend opting for an offset mortgage. This basically allows one to reduce their interest by offsetting their savings against their mortgage, so that, for example, if you had a ?100,000 mortgage and savings of ?20,000, you would only be charged interest on ?80,000. An offset mortgage also offers a range of benefits which allow flexible payments, as well as payment holidays.

The mortgage marketplace is tough, but with a bit of preparation and knowledge, it doesn’t have to be a nightmare to find a mortgage to suit your needs.

Paul McIndoe writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.