An Englishman’s home is his castle, so the saying goes.
These days, it seems, more of us are upgrading our ‘castles’. How? We’re financing improvements through easy remortgaging.
Figures show there’s a new trend for revamping rather than moving to a new home. In fact, more UK homeowners than ever are choosing to stay put and fix up their properties.
Across the last four years, there has been a five-fold rise in the number of homeowners opting to remain in their properties. They’re undertaking home improvements, rather than going to the expense and stress of moving.
There are several reasons for this:
1. Current Concern about the Property Market
The housing market outlook over the next three months is the worst for 20 years, surveyors say. This is due to lack of supply and affordability. Sales expectations for the next three months are now either flat, with no change predicted, or negative. It all indicates falling sales, across all parts of the UK, the BBC reports.
2. Stamp Duty Costs
This punitive tax is turning out to be a big deterrent to would-be movers. The sum imposed is 5% for a property worth over £250,000 and 10% for one over £925,000. At the moment, stamp duty costs £143,000 on a £2m property or £20,000 on a £600,000 home. The view of Professor Christian Hilber from the London School of Economics? “If you’re a young family and you’ve an additional child, you’ll need an additional room,” he says. “But the stamp duty is discouraging this kind of move because of the additional cost and lack of available homes to move into.”
3. Uncertainty over Brexit
The latest Purchasing Managers’ Index suggests the UK economy is losing momentum. It points to Brexit uncertainty as the culprit. The supply of new properties has been dwindling for six months, says Simon Rubinsohn, RICS chief economist. “It is hardly a surprise with ongoing uncertainty about the path to Brexit dominating the news agenda,” he adds.
4. Remortgaging Deals are Historically Low
We’re seeing low interest rates and intense competition among providers. That means there are many excellent deals available to homeowners with equity in their homes. So you can often borrow more to fund your plans without feeling the pinch. It’s why thousands of homeowners up and down the country are locking into super-cheap home loans by remortgaging.
5. Renovations Add Value
The housing market is cooling and buyers are potentially waiting to see how they’re impacted by Brexit. So more owners are thinking more about extending or improving rather than moving. Upgrading a property is an easy way to add value. This is particularly true in the case of loft conversions. Other worthwhile improvements are: fitting new windows, adding a conservatory or transforming a garage into living space.
So it’s hardly surprising more of us are taking the view that revamping our homes is an easier or more affordable alternative to moving. That’s whether we’re building extra bedrooms or overseeing a kitchen conversion for our growing family. Or converting our garages into playrooms for our children or into a home office for our business.
Political gridlock now is forcing many lenders, banks and building societies to offer an attractive choice of competitive remortgage deals. With the base rate holding fast for now, it makes sense to lock down these market-beating interest rates while you still can.
Choosing a mortgage, of course, isn’t as simple as getting the best introductory rate you can. The headline-grabbing rates don’t always tell the full story and you need to understand different lenders’ criteria.
Do you have questions about remortgaging or would like some advice on the right product type for your situation? We are happy to help you here.