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Essentially Mortgages Summer 2019

29th August 2019

IS SUMMER THE SEASON TO SELL?

With the summer months now upon us, could this be a good time of year to sell your house?

Conventional wisdom dictates that marketing your property through the summer months can optimise your chances of securing a sale. Once the warmer weather and lighter evenings arrive, people seem more inclined to consider moving home, particularly those with school-age children who would prefer to relocate over the summer holidays.

Indeed, market trend data has historically shown that completions begin to rise quite sharply in April and peak in August. With the average house taking between four and ten weeks to sell, the summer months certainly represent a busy period for house sellers.

Brexit a factor

Uncertainty surrounding Brexit did mean that the housing market got off to a sluggish start in the first few months of this year. However, there was an increase in activity following confirmation that the Brexit date had been delayed until the end of October, with a higher number of homeowners placing their homes on the market.

According to online estate agents Housesimple1, almost half of major UK towns and cities analysed saw an increase in listings in April. And the latest RICS UK Residential Market Survey2 showed further signs of improvement in May, which point to a continuing gradual recovery in activity levels during the coming months.

No ‘bad’ time to sell

While the summer has traditionally been viewed as the optimum time to close a sale, the autumn months can also be a good time to market your property as people rush to complete in time to celebrate Christmas in a new home. Indeed, the rise of the mobile web has made it much easier for people to search for and find their next home at any time of the year.

Ultimately, the best time to put your property on the market will vary according to your individual circumstances, your reasons for seeking a new home and your personal timeframe for moving.

1Housesimple, May 2019
2RICS, June 2019

SETTING GOALS AND KEEPING A NOTE OF WHERE YOUR MONEY GOES EACH MONTH ARE IMPORTANT IN HELPING TO SET A BUDGET AND ALLOW YOU TO CONSIDER WHETHER SPECIFIC PURCHASES ARE IMPORTANT OR JUST SOMETHING YOU WOULD LIKE TO HAVE.

TIME TO REVIEW YOUR PROTECTION NEEDS?

Nothing in life ever stays the same. And it is likely that any change to your personal circumstances will affect your insurance requirements, necessitating a review to ensure you still have the most appropriate products for your new situation.

There are certain life events when it will definitely be worth assessing your level of protection. These include:

Becoming a couple

If you’ve decided to share your life with someone else, you are also likely to be sharing your wealth. It is therefore important to consider how your partner would cope financially if you were no longer there and ensure that protection is in place for any joint liabilities that you and your partner have.

Buying a house

Buying your first home or upsizing to a larger home often necessitates higher levels of personal debt, so at this stage it may be appropriate to take out or increase your level of protection insurance to cover the full amount that you are borrowing.

Two becomes three… becomes four…

Having children changes both your personal and financial priorities. With each additional child comes extra financial commitments, both now and in the future, and your cover will need to reflect this. As well as protecting your family’s standard of living in the event of your death, you may also want to cover expenses such as a child’s university education, wedding or even driving lessons.

In addition, at this stage families often consider other forms of cover, such as accident, sickness and unemployment, critical illness or income protection policies.

A new job

An increase in salary or promotion could mean you can afford to pay higher premiums and increase your level of cover. Conversely, redundancy or a loss of income for some other reason may mean you need to reduce your cover to lower the payments.

Retirement

At this time in life, you may still require cover to protect dependent family members from financial hardship if you die. A protection policy can also help with Inheritance Tax planning, providing a payout on death that will help cover any tax liability on your estate.

WHEN WILL YOU BE MORTGAGE FREE? HOW TO WORK TOWARDS THIS GOAL

Paying off a mortgage as early as possible is a common ambition among homeowners and is a major step on the way to a financially secure retirement.

Setting goals and keeping a note of where your money goes each month are important in helping to set a budget and allow you to consider whether specific purchases are important or just something you would like to have.

Making regular overpayments or paying a lump sum off your mortgage is an option if you have funds available. However, if you have other more expensive debts you should consider paying those off first. With flexible mortgages, it’s possible to make overpayments, but even on a standard mortgage most lenders will allow you to overpay, usually up to 10% of your mortgage balance each year.

If you have savings you could opt for an offset mortgage, which allows you to balance your savings against the amount you owe on your mortgage. This reduces the amount of interest you pay and could allow you to pay more off the mortgage balance.

Finally, reviewing your mortgage regularly will ensure you are on the best deal. We’re here to help.

IN THIS ISSUE

DEARTH OF SMALL HOMES SCUPPERS DOWNSIZING

For many people whose children have flown the nest, it makes perfect sense to move out of the family home to a smaller, easier-to-manage property with lower running costs, releasing equity to fund retirement in the process. However, a chronic lack of smaller homes is negatively impacting on older people’s ability to downsize, according to research3.

The situation

The Responsible Life research found that in 16% of areas surveyed there were twice as many four-bedroom homes as two-bedroom homes. Cambridge and Rugby had just one two-bedroom home for every three four-bedroom homes, although in northern England there were a number of areas where two-bedroom homes actually outnumbered four-bedroom homes.

In a separate study, think tank Demos4 has estimated that there is a current annual shortfall of around 22,800 new retirement properties in the UK. With an ageing population, this situation is only likely to worsen with the shortfall expected to rise sharply over the next few years, adding further pressure to supply.

The consequences

The lack of smaller homes is having a knock-on effect for buyers looking to move into larger family homes as many older people, frustrated in their downsizing plans, remain in bigger homes that are no longer meeting their needs. And, with demand for two-bedroom houses exceeding supply, prices for retirement properties are likely to remain high, further reducing the appeal and practicality of downsizing by making it a less effective way to release equity.

3Responsible Life, 2019
4Demos, 2017

PLANNING AN EXTENSION?

Good news for homeowners in England wishing to extend their home, rather than face the expense and upheaval of moving to a larger property. Temporary rules, introduced in 2013, allowing larger single-storey rear extensions to be built without the need for a full planning application, are now being made permanent.

Under the rules, homeowners can add a single-storey rear extension of up to six metres for semi-detached or terraced homes, or eight metres for detached homes. Over 100,000 people have taken advantage of the temporary rules since 2013, which doubled the previous limits on extensions not requiring planning permission.

Instead of waiting for approval, the homeowner has to inform their local council of the building work due to be undertaken. The council officials will inform the neighbours, who can raise objections if they so wish. Where concerns are raised, the council may block the extension plans, if they decide it is likely to negatively impact the character or enjoyment of the area.

Kit Malthouse, the Housing Minister, commented: “These measures will help families extend their properties without battling through time-consuming red tape. By making this permitted development right permanent, it will mean families can grow without being forced to move.

In Northern Ireland, Wales and Scotland, rear extensions in excess of three or four metres, depending where you reside, will continue to require a full planning application.

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.
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