First-time home buyers need to examine options
Posted on April 25th 2008
Gloomy reports in national newspapers predicting house price falls, negative equity and repossessions have worried first-time buyers into stopping searching for a home of their own.
A report by bankers Morgan Stanley, for example, estimated that one in ten homeowners could be in negative equity within the next 24 months should house values drop by 15 per cent.
Andy Pratt, spokesperson for independent mortgage advisers Alexander Hall, said: "The one really, really important thing that first-time buyers need to understand is that they should look at the options.
"Look at what would happen if house prices went up, stayed the same, went down by five per cent or further. They need to look at that in relation to their own circumstances and see how long they will stay in their property for. It's not relevant until you come to either remortgage it or sell it, but the positive side is that, during that period, the consumer will be paying off the mortgage - assuming that they take out a repayment mortgage - so they'd be paying down the capital and reducing their loan-to-value … rather than wasting money by paying rent on a regular monthly basis.