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How the Credit Crunch Affects First Time Buyers

By: Emma Eilbeck BA (hons) - Updated: 16 Sep 2012 | comments*Discuss
 
How The Credit Crunch Affects First Time Buyers

With all the doom and gloom stories being printed about the credit crunch at the moment, it’s no wonder first-time buyers are being scared off buying property.If you are a first-time buyer, don’t despair, the housing market at the moment is your market, providing you fit a lender’s criteria then there are bargains to be had, and first-time buyers are the ones that can grab them.

The credit crunch is a double-edged sword for first-time buyers, on the one side you are in the best position possible. People will be looking to sell, and you are in a great place to be able to offer under the asking price, as you have no existing house to sell, so can offer them a quick sale. You will also find that houses are slowly coming down in price, so you will be able to pick up a bargain.

However, as with most things in life, with the good also comes the bad, and the bad news is that unless you have a moderately clean credit report, little debt, and have saved up a deposit for a house, a lender will be unlikely to offer you a mortgage.

Lenders are being more picky about who they are willing to give mortgages too, so whereas a few years ago you could have bought a house with no deposit at all, it is almost certain that you will need at least a 10% deposit in today’s market. You will also need to make sure that you have little or no marks against your credit report, and not already in a mountain of debt, or you may pose a risk to the lender.

What a First Time Buyer Should do

Don’t be put off by horror stories you hear about property prices crashing. Houses will also go up and down in value, and if you are looking to have your property for a long time, then look at it as an investment, and it is almost certain that the price will even itself out over in time.

There is little point in holding out and waiting to see if prices come down even more. The property market changes so rapidly that anything can happen in a matter of months, so if you find your ideal home, then go for it. It is always best to buy a property in the middle of a housing crash, as this means it is likely to be a lot cheaper, so either way you should be in pocket.

If you don’t have a deposit to put down on a property then it would be best to hold out and wait until either the market improves or you can save up a bit more money, or find a smaller property. It will be extremely hard to find a lender that is giving mortgages for 100% the value of the property, so sit back and wait for the market and products for mortgages improve.

All is not lost if you are a first-time buyer, you will no doubt hear people telling you it is the wrong time to buy, but in reality, as long as you have the money, and are not already in a lot of debt,there is no better time to buy. Houses are coming down in value, and even though there are not as many mortgages on offer, if you can get one, you should take advantage while you can.

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