Censeo Financial: Buying a Shared Ownership home in 2023!

Mortgage broker discusses 2022 and what buyers can expect in the next year

Introducing Censeo Financial

Censeo Financial are an award-winning mortgage broker specialising in Shared Ownership and affordable homeownership. Having been trading for over 16 years, we work with many housing associations, councils and developers and have helped thousands of first time buyers get onto the property ladder. We have access to all lenders who offer Shared Ownership mortgages and often get exclusive deals that you wouldn’t get from going to a lender direct.

We understand the importance of providing a friendly and helpful service and have achieved 98% five star Google reviews in the last 12 months – we strive to offer the best service possible and to find our customers the best mortgage for their personal needs saving time and money.

The current economic situation

The current economic environment is challenging for everyone. As the Bank of England tries to manage inflation, we have seen a rise in interest rates, and an increase to the cost of living with everyone reviewing their spending habits.

The mini budget caused a lot of lenders to pause lending. When lenders released new mortgage products, they would be available for a short period and withdrawn at short notice, often replaced with higher interest rates due to the uncertainty in the market.  

Although these are slightly more challenging times, lenders have always changed mortgage products and interest rates at short notice, so it is therefore very important to prepare yourself for applying for a mortgage. Take a look at Censeo’s previous blog here for the minimum documents a lender will need to see when applying – without these a mortgage application can’t be submitted or may delay processing which can result in you not securing the mortgage interest rate or even losing the property due to delays. Censeo works closely with our buyers to help minimise this and will have obtained a lot of the documents at your initial affordability assessment.

Over the last few months, we have seen mortgage rates rise, resulting from the Bank of England’s Monetary Committee rate reviews as they try to control the rising UK inflation. Lenders mortgage rates are linked to the Bank of England base rate and SWAP rates. Mortgage interest rates have been at an all-time low for some time, with many first time buyers never seeing interest rates at the current levels despite significantly higher historical rates  – many parents will remember mortgage rates of over 10%.

It’s not expected rates will get anywhere near those levels. We have seen mortgage interest rates start to gently fall, since the latest Prime Minister took up office, however these may rise slightly after the expected Bank of England base rate increase in late December.

So, we are now approaching Christmas and the new year celebrations. The expense of buying presents and parties can result in increased spending on credit cards. For those looking to buy in 2023, using credit cards to overspend may not be wise, as this can reduce the size of mortgage you will be able to secure. Christmas equally could be the opportunity to ask for useful gifts to help you buy your first home – some money towards your deposit or something for your new home will help your budgets and start your journey to buying your home.

Looking forward into the new year

If your New Year’s resolution is to buy a home, take the opportunity over the festivities while you sit with your family watching the usual Christmas TV repeats or that traditional family movie to have a look at the Share to Buy website.

You will find lots of Shared Ownership properties for sale. The site is full of useful information to get you started and you can contact Censeo, the exclusive mortgage broker to Share to Buy, about anything mortgage related. Some of our team will be available between December 28-30th with everyone back on January 3rd to help.

Contact us at [email protected] or call 0207 090 7290.

How best to prepare for buying a home in 2023

Some of you reading this will be unsure if now is the time to buy a home, with challenges to the cost of living and recent interest rate increases. It may not be for some, but it is a good time to start preparing – maybe check your credit score or set up regular savings for your deposit. It’s also worthwhile creating a spreadsheet and working out how much you spend each month and then consider the costs of having your own home – it really focuses you and you will start making changes and adapting your spending habits.  

For those living with family, moving to take up a new job or renting from a private landlord, it may just be the right time. Many renters have seen large increases in rents and the need to have much larger deposits to secure a rental with no certainty on the future past the initial tenancy term. Zoopla reported that homes for rent have reduced by 40%, with UK rents averaging 12.1% although regional cities seeing higher rises and causing affordability to be at a 10 year high.

The deposit required could be similar to the minimum 5% deposit needed to buy a share in a property through Shared Ownership, giving you a more secure tenancy. Rental properties do give you more flexibility and will be the best option for some. Landlords are seeing a rise in buy to let mortgage rates and are required to bring homes up to a specific Energy Performance Certificate (EPC) standard by 2025 which has a financial cost to undertake the necessary improvements. This in part is being passed on to the renter but some landlords are deciding to sell which is reducing the rental stock and increasing rents.

Good news for first time buyers!

Not everyone wants to rent, and some want to have the stability of a place to call home. With the end of Help to Buy, first time buyers who can’t afford to buy on the open market may turn to Shared Ownership which gives budding buyers the opportunity of a more stability.

Rising property prices do challenge affordability requirements, especially with higher mortgage rates than in recent years, however Rightmove have reported that the average newly listed UK property has dropped by 2.1% (£7,862) in November. This is similar to the Halifax House Price index indicating 2.3% – a slight correction on recent property price growth. Alongside mortgage interest rate reductions over the last few weeks the combination appears good news for first time buyers.

In November, a special meeting of the Treasury Committee took place to examine the mortgage market following the mini budget and inflation rises, at the meeting it was stated that 2023 could be a good time for first time buyers to purchase their first home, according to a panel of mortgage experts who spoke to MPs.

Motivated first time buyers have been largely undeterred by the economic shocks of the last few months, however they are making lifestyle changes to compensate, a study from Rightmove shows. Its research says that in their efforts to buy a house, 72% of people asked said they had reduced spending on going out or eating out and 55% have cut their energy use. Additionally, 49% said they are spending less on holidays and 48% said they are spending less on food and essentials.

As Help to Buy has ended, we are seeing lenders actively offering first time buyer mortgages and competition increasing with Octane Capital research finding that first time buyers are enjoying a 45% increase in product choice, compared to 2020. Octane research also predicts that monthly mortgage repayments are expected to fall by an average of £188 come this time next year. This is a prediction based on research but there is no guarantee about this.

New build properties

With the cost of living at the forefront of our minds, new build properties are built with the latest methods of construction. These are more energy efficient which an Aldermore Bank survey found that 65% of first time buyers were looking for energy efficiency with 37% seeing new build homes as the most popular for cost savings as it is expected these homes will need less repairs. Many new builds can also benefit from lower interest rates from green mortgages which are becoming more widely available.

The final checks for the journey to homeownership

It is important that you prepare for a mortgage application, check your affordability before you reserve a property and make sure you get some mortgage advice from a specialist mortgage broker like Censeo, who have access to all Shared Ownership lenders, including some that can only be accessed through mortgage brokers. A mortgage is likely to be one of the largest financial commitments you will ever have, this deserves time to gain professional advice by qualified mortgage advisors who can provide mortgage advice to meet your financial situation and personal goals.

Take some time during the festivities to get your finances in order, prepare for a mortgage and start your search for a place to call home. We are here to help with affordability assessments and mortgage advice when needed – we hope to hear from you soon, good luck!

Share to Buy is a one stop shop for affordable homes. On our website, you can search for properties, compare mortgages and find out all you need to know about alternative home buying schemes such as Shared Ownership via our article index.