Mortgages: what a difference location makes
Released
on: September 8, 2008, 9:16 am
Press
Release Author: Think
Money
Industry:
Financial
Press
Release Summary: Differences between the English and Scottish
housing markets underline the importance of location – a
factor that every would-be homebuyer should consider carefully,
says financial solutions company ThinkMoney.com
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Press
Release Body: Commenting on recent figures from the Council of
Mortgage Lenders (CML), financial solutions company ThinkMoney.com reminds potential
homebuyers of the need to think twice about the location of their
proposed purchase.
In
Q2 2008, there was an 18% quarterly increase in ‘loans for
house purchase’ (mortgages) in Scotland – a year-on-year
decrease of 34%. These figures were significantly more robust
than the Q2 figures for the UK as a whole: a 5% quarterly increase
and a year-on-year decrease of 46%.
“The
issues in the mortgage market are affecting the whole of the UK,”
said a spokesperson for ThinkMoney.com, “but
the availability of mortgages does vary greatly from country to
country. Prices are, of course, a key factor in determining whether
people can get on – or move up – the property ladder:
in May 2008, the average house price in Scotland was £167,126,
according to the Department of Communities and Local Government,
while the average UK house price was around 30% higher, at £218,151.
“What
these figures highlight is the sheer scale of the price variations
in different parts of the UK – but there’s no need
to move country to benefit from this, as the price of two similar
properties a few miles apart can easily vary by tens of thousands
of pounds. Any would-be buyer would be well advised to broaden
their search to include nearby areas: unless there’s a significant
difference in terms of amenities, a lower price could more than
compensate for any minor compromise they have to make.”
At
a time like this, when prices have dropped substantially, a slightly
more flexible approach to house-hunting can really work in a buyer’s
favour – especially if they’re a would-be landlord
and therefore less likely to be ‘tied’ to a certain
area. “Lower prices always give homebuyers a chance to buy
a better property and / or put down a larger deposit, but in today’s
mortgage market, a lower price can be particularly attractive.”
Since
deposits are measured in terms of percentages, a sum that counts
as a 23% deposit on one house could easily account for 26% of
the value of another. In some cases, this could give access to
a significantly lower rate of interest; in others, it could make
the difference between being offered a mortgage and being refused.
While
mortgage providers have always reserved the best deals for people
with larger deposits, the disparity is particularly noticeable
in today’s mortgage market, with the bulk of the recent
rate cuts benefiting people with larger deposits far more than
those with less to lay down.
Finally,
when house prices are dropping, no would-be homeowner should buy
property without weighing up the odds of losing money on it, and
comparing this with the money they’d spend if they continued
to rent. “This isn’t a straightforward equation. Even
though homeowners face the possibility of negative equity (carrying
a mortgage that’s larger than the value of the property),
they also know that house prices are bound to recover sooner or
later – but any money spent on rent is gone for good.”
Web
Site: http://www.thinkmoney.com/mortgage/
Contact
Details: Pennington House, Carolina Way, South Langworthy Road,
Salford M50 2ZY
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