I'm a property expert – is NOW the time to buy as house prices and mortgage rates go up?

BUYING a property is a big commitment and timing could be everything.

As house prices reach record highs and mortgage rates increase, is now the time to buy your first home?

Samantha Bickford, mortgage specialist at Clarity Wealth Management, says there's never a perfect time to buy a house – but if you're trying to get on the ladder, you might not want to wait.

According to the Office for National Statistics, house prices soared a whopping 10.9% over the past year to an average of £277,000.

As a result, some buyers are scrambling to secure a home before prices go up any further.

Add to the mix the fact that interest rates are rising, and buying now means you will still be able to lock in a cheap mortgage deal.

Bickford said: "While interest rates are starting to creep up, and have been slowly for some time now, they are still historically very low."

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According to broker L&C, the average two-year fixed mortgage rate has risen from 0.89% in October 2021 to 2.36% today, adding £105 to monthly repayments.

This is set to rise further if interest rates keep going up.

Bickford also points out that there are Government incentives that can help first-time buyers, which may not be around forever.

Shared ownership schemes and the Help to Buy equity loan, for example, may help first-timers get on the ladder when they otherwise might not be able to afford it.

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A Lifetime Isa is a great savings vehicle too, available to those aged between 18 and 40.

You can save up to £4,000 a year into these accounts and the Government will give you a 25% bonus on your savings if you use the money to buy your first home.

Of course, after such strong house price growth, some buyers may be tempted to hold off in the hopes of bagging a bargain if there's a crash in the market.

But Bickford doesn't think this is on the cards: "UK property is still very much in demand, so I don't predict we will see a crash in house prices any time soon."

However, she suggests aspiring buyers try to save a bigger deposit before they leap on to the ladder just to be on the safe side.

"First-time buyers taking out a 95% loan-to-value mortgage could find themselves in negative equity if we were to see a dramatic fall in house prices."

Many lenders save their best mortgage rates for those with bigger deposits, and if you can put down a 10% deposit, you'll likely get a cheap deal, which will save you money in the long-run.

Bickford adds: "First-time buyers need to remain levelheaded and make sensible financial decisions based on what they need now, and in the long-term."

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Each week, we speak to first-time buyers in our My First Home series about how they managed to get on the ladder.

One couple paused their holiday plans to save nearly half of their deposit, while another pair saved a £10,000 deposit using the envelope trick.

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