There’s no doubt that the housing market has changed this year, driven by the rise in mortgage interest rates and consumer uncertainty, house prices have started to fall but what does that mean for people looking to move house and upsize. These are the things you need to know when moving in today’s market.
1. Upsizing in a price falling market should work in your favour.
Let’s do the sums on this one. If house prices fall by 5%, that means your current property sells for 5% less than it would have done. Now before we get too upset about that, let’s remember what that means – the property you are buying will also cost 5% less! 5% of a bigger price tag equates to more that 5% of a smaller price tag so if you are upsizing, you could be substantially better off in a falling market.
2. You will be borrowing less.
Buying for less should mean borrowing less and borrowing just £10,000 less at today’s mortgage borrowing rates could mean saving almost £1000 year*.
3. You maybe able to afford to buy a property that was previously out of your price range.
This might sound obvious but it’s not. Remember when you are applying for a mortgage to buy a home, it’s the lender that decides what is affordable and that is based on your income. The less you need to borrow, the less you need to earn so you might not need to wait for that pay rise to be able to move.
4. Borrowing has got more expensive
There is no sugar coating this one, the interest rates for mortgage borrowing have increased and you will currently be paying more for your mortgage borrowing than in recent years. However these rate rises have helped to drive the house prices down and if your broker can devise a strategy to keep your repayments low as possible it may be worth riding the storm as predictions are that interest rates will start to fall again.
5. You can move with your current mortgage rate – for now.
If you are currently on a low mortgage rate and that is fixed for another few years you don’t necessarily have to lose it just because you are moving. Many lenders will let you move (port) your current mortgage product to another property and top up the loan. The new part will be on today’s rate but the part that is ported will remain on the same rate until the fixed term expires.
If you’re considering a move and would like more information about mortgage borrowing call the Ask About Mortgages team on 01794 328365 or email answers@askaboutmortgages.co.uk and we can schedule you a meeting with one of our brokers. We offer a fee free service for both advice and mortgage application.
*Based on £10,000 worth of borrowing over 25 years at 6%. Actual amount £780.