Britain has enjoyed a number of property booms over the past 20 years. And despite the fact that property prices have also tumbled on a number of occasions, the average house price has risen significantly.
According to the Nationwide House Price Index, the average UK house price went up from £54,008 at the end of Q3 1996 to £206,346 at the end of Q3 2016 – a whopping 282 per cent increase.
Unfortunately, rising house prices has meant that it has become harder for first-time buyers to get a foot onto the property ladder. Using the average house price as a guide, even if a mortgage has a 95 per cent loan-to-value, buyers would still need to find a deposit of over £10,000. Add in solicitor and estate agent fees and the initial layout can seem daunting.
After the political whirlwind of the last couple of months, it appears the country’s immediate future may be becoming a little clearer.
Now that Theresa May has taken office as Prime Minister, she will agree the government’s negotiating position before she triggers Article 50, and officially starts the clock on the UK’s exit from the EU.
Many homeowners may find that once that their deal comes to an end, their interest rate and mortgage payments may well go up. This could be a good time to check out whether you can re-mortgage and get a lower rate elsewhere.
In this case you are generally going to be taking out a mortgage which is the same size as the one you already had. Your monthly payments may be higher or lower than you currently pay, depending on the mortgage you go for. Alternatively, you may just want the stability of a fixed rate, if you’ve been on a variable rate that you think may fluctuate.
It can take a few months to process a mortgage application, so it’s best not to wait until your current deal ends before you start looking around. Watch our new #AskExperian video to find out what some of the options are.
At a time when younger people are finding it harder than ever to buy their first home, it’s not exactly a surprise to find out that many of them are relying on family support to make buying a property a reality.
Experian research has found that over a quarter (27%) of Britons aged 55+ have provided support to their children or others to help them buy their own property – regardless of how financially comfortable they are, and a significant proportion (15%) of those people say they are ‘not at all’ financially comfortable.
It’s a far cry from how things once were. 60% of 55s and over who have ever owned their own home paid £20,000 (that figure, in 1986, would be around £54,000 in today’s money) or less for their first home, compared to recent figures showing the UK average cost of smaller homes today as £182,926.
Applying for a mortgage is rarely a straightforward process. Your mortgage is likely to be the biggest financial commitment you’re ever going to make – with lots of decisions to make, forms to fill in and waits for lenders to respond.
In April 2014, the process was made even tougher with the introduction of new rules on mortgage affordability. The Mortgage Market Review (MMR) was introduced to make mortgage lending more responsible and stable.
Lenders are keen to know whether you’ll you be able to afford your monthly repayments should interest rates go up or if your circumstances change.
So they’re likely to pay close attention to your income, monthly outgoings and savings as well as the information in your credit report and application form.
Applying for a mortgage is likely to be one of the biggest financial decisions you ever make. Taking the time to prepare and really understanding what a lender is looking for – before you make your application – could not only affect you getting approved, but could also save you a lot of money in the long term.
This guide will give you some simple steps to follow to ensure you are in the best possible position to have the mortgage you can afford approved – and at the best rate.
The mortgage lending process Usually a lender (the bank or building society) will consider the following when deciding whether to approve your mortgage application:
The information in your application form, including your salary and employment status
So what’s the scenario for young people today? Watch our video to find out what some of the options are out there, and some tips for how improving their credit score can set them on the road to getting on the property ladder.