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Be careful not to overstretch yourself in the mortgage market

Even though the immediate future of the UK property market is still relatively uncertain, a number of people have started to look again at potentially acquiring property for the future. While mortgage rates have started to creep higher, even though UK base rates remain at 0.5%, there is still a need to ensure that you plan ahead and give yourself some leeway between potential mortgage payments now and in the future, as rates are expected to rise.

Even though many people believe there is excellent value in the UK property market this is not a market which will turn overnight and you should not go into it expecting to make a significant return in the short term. Its UK base rates edge higher and higher, eventually getting as high as example 5%, then variable mortgage rates will be substantially higher than they are now. If you are looking for the dream property and stretching your finances to the limit, how would you cope if another two percentage points or three percentage points were added to your mortgage payments?

Many people automatically assume the dangers of overstretching your finances only occur at the top of the market when in reality this is a very individual and very specific situation. If you overstretch yourself at the bottom of the market you may in theory make a significant return in the medium to longer term on the value of a property but would you be able to maintain the mortgage payments in the meantime?

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