Climbing the property ladder - an impossible mission?

The current uncertain economic climate may put people off buying property

To buy, or not to buy? This is the question most would-be property buyers are trying to determine, and one which is wholly understandable given the current climate, interest changes and, occasionally, some lenders deciding to withdraw mortgage offers.

Following years of low interest rates, another recent interest rate increase has not filled potential purchasers with confidence. The rising cost of living and uncertainty in the economy is making vendors and purchasers tentative. Most are choosing to stay put for the time being.

To add to this uncertainty, some lenders have recently withdrawn mortgage offers that they had already issued. Once contracts have been exchanged it is unlikely for an offer of a mortgage to be withdrawn unless the potential borrower’s financial circumstances have changed substantially.

However, this happened recently, due to the mini budget and interest rates going up, costing prospective purchasers their deposit and incurred legal fees. This, in addition to concerns about soaring interest rates, would scare the bravest of those considering purchasing a property.

Precautions buyers can take 

Even if these risks are unusual occurrences, any potential purchaser can protect themselves by having a short period of time between exchange and completion or by exchanging and completing simultaneously on the same day. This way, a report on title to the lender called the ‘Certificate of Title’ requesting funds for completion would have been served already.

This alleviates some pressure as confirmation of the funds' release will have been sent to the purchaser’s solicitor. A potential purchaser could go a step further and obtain an indemnity policy for loss of deposit if they are unable to complete due to a lender's ’change of heart’.

There is, thankfully, some positive news despite the current turmoil. Some mortgage products that were pulled after the mini budget announcement have re-entered the market which would imply the lenders are more optimistic for the immediate future.