Industry expert shares his top tips for those thinking of buying in 2024
Getting on the property ladder might pose challenges for potential buyers, but despite this, research from Mortgage Advice Bureau (MAB) indicates that 50% of potential buyers have not sought guidance on their next property purchase.
Ben Thompson (pictured), MAB’s deputy chief executive, listed the key considerations for those planning to buy in 2024.
“A mortgage is likely to be one of the most significant financial investments of your life,” he stated. “That’s why it’s important to go into the process armed with all the facts. A mortgage adviser will help you make informed decisions about what is going to best suit your individual needs and circumstances.
“Whether you’re looking to take out a longer-term mortgage, buy a house with a friend, or investigate the security of protection insurance, they can work with you to understand your financial situation and help you to achieve your homebuying goals.”
Seeking advice
“No matter what stage of the buying process you are at, seeking advice should be top of your to-do list,” Thompson said. “While navigating the market and the buying process can present challenges, help is certainly out there.”
He stressed that seeking guidance from a mortgage adviser – even in the very early stages of the buying journey – could lead to a better understanding of the mortgage process and help alleviate any fears or unknowns.
Seeking advice, Thompson added, will also help determine what the maximum is that the buyer could purchase.
“For example, an adviser might be able to find lenders willing to allow you to borrow more to enable you to jump from a two-bed to a three-bed house,” he explained. “Advisers are much more than just a comparison site in human form.”
Saving for a deposit
This, Thompson said, can often be one of the biggest hurdles to overcome when buying a property.
“For prospective buyers, it’s still vital that they save as much as possible,” he continued. “Using the current higher interest rates to their advantage by looking for better rates on their Lifetime ISA, or opening other savings accounts with higher rates, could go a long way to building that deposit. If prospective buyers are struggling to get an idea of what they could borrow with their deposit, handy online tools, like our borrowing calculator, can help provide some clarity.”
Buying with a friend
Thompson pointed out that many friends or family members are now rallying together to become homeowners.
“Not only does it potentially increase the amount you can borrow and the type of property you can afford, it also allows you to split things like household bills and insurance,” he added.
“Before agreeing, you should ensure that all parties are fully informed of each other’s financial history from the outset, so there are no nasty surprises.”
Looking at longer-term mortgages
Another emerging trend from 2023, according to Thompson, was longer mortgage terms (between 30 to 40 years) rising in popularity.
“Buyers have been considering these due to the lower monthly repayments they can offer – however, they’re not for everyone, and you should think carefully about getting one,” he reminded. “You should consider what this could mean for you longer-term, as the lower repayment amounts mean you will likely only be paying the interest off for a few years of the term.
“Should house prices drop, you could quickly find yourself in negative equity, where the value of the loan is greater than the property. Nevertheless, for those who favour long-term security over the repayment amounts, this could be a good option.”
Taking out a protection policy
“A property is likely to be the biggest purchase of your life, so ensuring that you’re prepared for all eventualities should also be a key priority,” Thompson said. “Knowing which protection policy is right for you is another step you should take before buying, and there are a range of products to choose from.”
These products include critical illness, which will help the buyers cover themselves financially should they suffer from a range of medical conditions, and mortgage payment protection, which can cover mortgage payments if the buyer is made redundant or become too ill to work.
“Taking out a protection policy will help you sleep soundly knowing that you can continue to meet mortgage payments, whatever happens,” Thompson stressed. “Due to the number of policies and complexities involved, we highly recommend that you speak to a mortgage adviser to arrange a protection review.”
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