Ask Jenni: Should I Buy A House Now Or Wait Until After Brexit?

Hi Jenni

I’ve spent the last two years saving to buy a house with my boyfriend and we finally feel like we’re ready to buy somewhere. But we’re wondering if it’s best to wait until we’ve properly left the EU next year. We’ve heard that Brexit could affect property prices. Will it be cheaper to buy a home after Britain has left the EU?

Steve, 29, Dorset

Hi Steve

First of all, no one can say for sure what will happen when we leave the EU because it’s new to us all. Even the world’s leading economists, financial advisors and money journalists are left scratching their heads with uncertainty.

The Governor of the Bank of England, Mark Carney, has warned that if it all goes tits up and we face a no-deal Brexit, the economy could suffer, unemployment, consumer prices and interest rates could rise and house prices could fall. However, in contrast, some experts predict that house prices could either stay the same or continue to grow. No one knows!

For this reason, I think it’s wise to focus on what you do know, instead of what you don’t and to focus on what you can control, rather than what you can’t.

Focus on your finances

Instead of worrying about what might happen when Brexit is finally implemented next spring, focus on your own financial situation and make your decision based on that.

Brexit aside, are you actually in a good position to buy your own place? Do you have a decent deposit saved? Do you have a regular and reliable income?

For example, if you have a 40% deposit and you can comfortably afford your repayments, there’s probably little point postponing your purchase in the hope that house prices will fall and you’ll get a better deal. After all, there’s no guarantee that prices won’t in fact rise.

If, however, you have a 5% deposit and your income is unpredictable or you suspect there’s a risk of you being made redundant in the next couple of years, it might be best to wait until you’re in a better position financially before taking on so much debt. There’s so much pressure for young people to get on the property ladder that many overstretch themselves and find themselves in a worse position than if they were to continue renting. Considering how expensive renting can be, this isn’t always the case, but there’s no point taking on hundreds of thousands of pounds worth of debt if you cannot afford to manage it properly.

Your finances need to be healthy and strong, but not necessarily immaculate

Saying that, you don’t have to have absolutely immaculate finances to buy your own place. If you’re self employed, you have a modest deposit or you have a less than perfect credit score, all hope is not lost. These home buying hurdles don’t automatically make you financially incapable of affording your own home and there are lenders out there who will consider your application.

Use a mortgage broker to increase your chances of an affordable mortgage

If you decide you’d like to proceed and buy your own place, I’d strongly recommend asking a mortgage broker for help and guidance. A good independent mortgage broker will assess your financial situation, weigh up your borrowing capabilities, and point you in the direction of the lenders most likely to give you the money you need. When buying my first home last year, I used the online mortgage broker Habito.

Habito is a fee-free mortgage broker and so they won’t charge you a penny for their services. They’ll compare dozens of mortgage deals from across the market before helping you decide which one is best for you. They’ll also guide you through the entire process, saving you tons of time, money and stress.

Also, if you use my Habito referral link to create your free account, you and I will earn £100 each on successful completion of your mortgage!

Consider protecting yourself with a fixed rate deal

Most mortgages come with the option of ‘fixing’ the interest rate for a specified period of time. When you fix your mortgage, whether it’s for 2, 5 or even 10 years, you protect yourself from fluctuating mortgage repayments and make it easier for yourself to budget accordingly. The downside of fixing your mortgage is that if interest rates fall, your repayments will stay the same.

I fixed my mortgage for 5 years so that I could have the peace of mind that my repayments won’t suddenly increase as a result of economic uncertainty.

To learn more about buying your first home, take a look at Can’t Swing a Cat’s first time buyer blog section.