House Price Spy Blog

Remember when every mortgage advert mentioned Mortgage Repayment Holidays? While you wont get them as add-ons to your new mortgage many people are checking the small print on their loan and taking the option to have a year or even a few months out of payments at crucial times.

Mortgage lenders probably wish they had not offered these and in the current climate we have to take any opportunities we get!

Apart from Mortgage Repayment Holidays we also recommend shopping around for your mortgage and getting advice from a finance professional to give you the best advice. While it may cost you a bit it could save you thousands over the term of your mortgage.

Many people are taking longer mortgages on a fixed rate, but remember that the current problems will not last for ever and then you might regret signing up for 10 years!

So check the small your small print on your mortgage whether you could be take the pressure off with Mortgage Repayment Holidays!

The Scottish Executive are handing all first time buyers a helping hand up onto the property ladder by lending between 40% and 20% of the property value through a registered Social Landlord.

This will give much needed assistance to first time buyers who are short of a deposit or struggling to get a larger enough mortgage or are on low wages. The equity will be shared by the buyer and the Housing Association.

Whether owners will want to have part ownership of a property will remain to be seen…

The popularity of this scheme North of the border will determine whether it is expanded to the rest of the UK.

Find out more about the Scottish Supply Shared Equity Agreement Scheme

How many repossessions are the credit crunch going to cause? Of course we dont really believe all the hype the media has been trying to propagate, but with a drop in house prices comes negative equity which is where repossession comes in. While the recent developments in finance, and mortgages in particular, have tried to deal with overpriced and overvalued property paid for by over mortgaging property there are still plenty of people who face having their homes repossessed.

It goes without saying you should think twice about overmortgaging your property, not taking out remortgages without good reason, paying more than a property is worth and over stretching your finances in other areas. If you do get into trouble then the first stop should be to rationalise your finances and obviously get in touch with your lender stating what your position is. Even after repossession proceedings start you can claim the property back during negotiations between lenders and borrowers. While lenders can make money back from repossession these are bad for business so they try to keep these to a minimum. The recent developments in the US finance industry have been as a result of stricter regulation of borrowing and have led to the end of 100% mortgages and many special deals that were offered.

Buy to let borrowers can even be hit with top up payments to keep their borrowing at a certain percentage of the total value and this is pricing many out of that market

The Halifax has revealed that the UK property market has suffered the Biggest price drop since 1992. The average price drop will be around 5%, The average house price in the UK is £191,000 rising from around £60,000 in 1992.

While house prices are down unemployment is down to a record level and property prices are driven by the labour market so these figures are seen as being an leveling out of inflated property prices.

First time buyers will need a downpayment of at least £10,000 to get onto the property ladder these days with the demise of 100% mortgages and many of the special deals the lender used to entice borrowers into taking the plunge.

Government legislation comes into force today which could see many ‘buy to rent‘ landlords selling up and place their propeties on the market, the rate of Capital Gains Tax has been cut from 40% to 18% (over value of £9,600) in the recent budget. This could lead to even more properties on sale, lowering prices still further. Good for buyers, bad for sellers.

With contraints being put on credit given out by lenders, many are feeling they want to get out and this change in Capital Gains Tax is the perfect reason. On a national scale house prices dropped by 2.5% during March.

Bradford & Bingley and HBOS have announced that they require ‘buy to let’ borrowers to top up their deposit if their mortgage rises above 85% of the value of the property and many small scale lanlords are bailing out.

The Bank of England surprised everyone yesterday but cutting the rate by 1/4 of a percentage to 5%. The trend has been maintain, lower, maintain, lower but few were expecting another drop so soon.

You can’t have escaped the doom and gloom (and even a bit of panic) in the media in the last few days about the bottom falling out the property market, the state of play is that lenders have had a reality check in how much, and who, they lend to and in addition in the wake of the crisis in US finance the rates of lending between lenders has risen.

While the media will tell you this is all bad, there are up sides in that less people will get stupid over mortgages on overpriced homes and in fact with propety prices falling in some areas first time buyers are actually finding it easier to buy in some areas of the UK!

The facts are that if you do your homework on an area and buy in an everpopular area where property never stays on the market long, and never pay more than what you your head tells you should be paid and have a small deposit to spend you will never be in too much trouble. Since the property market goes in cycles you will never need to wait too long to be able to buy or sell.

If its a buyers market then you just sit it out, there are more people looking for property than ever before so property in good locations will never lose equity.

With the current property climate you still have choices…Avoiding the credit crunch can be as simple as considering a few options:

Consider an interest only mortgage, if you buy in the right area your property will gain value every year.

Move further afield, more and more people are commuting further to get on the property ladder.

Consider joint ownership with parents, friends or a partner etc

Get Government help, the LIFT scheme offers first time buyers assistance to get on the property ladder.

Invest your deposit and wait for better conditions. There are non-risk investments where you could appreciate your thousands better than property.

Take a longer mortgage, for 25 years plus. That does not mean you have to be locked in for longer or stay in one place for that duration.

This will include mortgages, re-mortgages, secured loans for credit cards, overdrafts and business loans. Some mortgage offers and styles of mortgage will be withdrawn as not viable in the current financial climate.

Lenders have also stated that borrowers are happy to take longer duration fixed loans of up to 10 years without significant inducements due to the lack of consumer confidence.

First time buyers will need at least 15% to get onto the property ladder, and the days of 100% or even 100%+ mortgages are well and truly over!