Beware of overstretching yourself in the property market!

Despite the fact that the UK property market is in the eyes of some people looking better value than it has for some time, you must always be aware of overstretching your finances when acquiring that dream property. Many people automatically assume that the risk reward ratio in the UK property market is now very much in favour of buyers because of the drop in prices over the last few years. However, that may not be the case for everybody!

If you imagine taking on a mortgage with a rate of say 4% or even 5% with UK base rates at 0.5%, how would you expect mortgage rates to perform if UK base rates in the future were to hit 8%?

This is the problem which could face many first-time buyers in the UK who are often looking to snap up that bargain property as a great investment for the future. It seems almost inevitable that UK base rates and UK mortgage rates will increase at a greater pace than UK wage inflation in the short to medium term. As a consequence, many people who overstretch themselves in the property market today will find it almost impossible to cover their future mortgage payments. Caution is the watchword even if that dream property now looks more accessible and more within reach than ever before.