Welcome to the November Sammon Mortgages newsletter for Hurford Salvi Carr. As house prices continue to increase we look at how your mortgage could be used to build up to the space you need.
The Office of National Statistics reported that house prices in Britain has reached £286,000 with the average first time buyer home costing £216,000. A desperate shortfall of available property is the key driver to the continued price climb. Access to cheap mortgages has added fuel to the fire: the low rates have made buying accessible for many more people. The appetite to get on the property ladder is as strong as ever.
While house price inflation continues to outstrip wage inflation, home ownership is only going to move further out of reach for many. Rightmove’s house price report for November shows that the two areas for fastest-increasing house prices are the East of England, where asking prices are 10.4% higher than a year ago, and the South East at 7.2%. By contrast, wages have increased by only 2.7% in the East and 1.9% in the South East (Office of National Statistics).
One way to get onboard sooner rather than later is to consider a smaller property that can be extended. Normally, once six months has passed since the purchase, lenders will consider further borrowing based on the property’s current value. Whilst not much increase to the property value can be expected in six months, it might in two or three years. This, coupled with a good record of monthly repayments, can allow owners to buy small initially, but then borrow later for an extension or loft conversion. It is not necessary to remortgage away: the existing lender will normally offer a ‘further advance’, subject to a new survey and priced at their current market deals.
You do need to be sensible about the timings of your mortgage Early Repayment Charges. If you are just reaching the end of the early repayment period on your original loan, starting a new loan on a rate to which you are tied-in may restrict you from remortgaging or switching to a new rate when the time comes. It might suit to borrow the new loan on their Standard Variable Rate (SVR) or a rate with no tie-in until you are free to secure a new rate for the whole loan amount. Take care as costs are varied: HSBC’s current SVR is 3.94%, TSB’s is 3.99% and Chelsea Building Society’s is 5.45%.
A truly telling sign of a desirable neighbourhood is the frequency of skips on the drives; they can indicate owners happy where they are. It also shows that planning permission has been approved there so if you are looking to buy for the long term, you may have a better chance of getting permission to extend in the future.
As more buyers look for ways to create the dream homes they can’t buy, it is likely that staying put and extending will become more and more popular. Buyers should ask what scope there is for extending when they are viewing a property. Vendors too can apply for planning permission before sale to enhance what they are offering.
If you would like help costing your ideas, please call me on 0844 879 4522 or email firstname.lastname@example.org. Rates can be withdrawn at any time but are right at the time of publication.
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