Whilst fish & chips, afternoon tea and owning your own home are classically British traits, our continental cousins in France and Italy are still happy to pay rent for their homes. So is this preference toward ‘bricks and mortar’ investment healthy?
For many years this model of owning a home did indeed make sense. Location flexibility was required by only a few employers and as families tended to stay close to their roots, purchasing a house as an investment and something to pass on to the kids (or to sell and fund a retirement) worked out as a great all round option.
Then along came the Eighties’ and with it a housing boom and an even tougher bust with interest rates soaring toward 20%. Then in the late Nineties and most of the Naughties came along another considerable period of house price rises, until the financial turmoil and fall out from the now infamous Sub-Prime lending.
This has left many British families who had gambled their financial futures on house price rises starting to sweat and require debt advice UK. Sure a period of negative growth had hurt a little bit – and indeed a blanket drop of approximately 30% across the UK (London excepted!) did initially look a bit scary.
It also means that somewhere between 10 & 15% of UK mortgage holders are still in ‘negative equity’ meaning that their possibility of moving is restricted, unless they effectively find another deposit to help them secure a mortgage.
For example, a couple who earn £40,000 between them and bought a £200k house with 100% mortgage (i.e. a £200,000 mortgage) in 2007 could now expect that house to be worth less than £200k today.
If that couple had lost their jobs through redundancies and now wanted to move to a similarly sized house in a new area for a new job, then they could be some thousands of pounds short of the amount needed to repay their original loan.
In addition, under current mortgage lending criteria, most lenders are not offering mortgages for any less than 85-90%.
So, with this kind of scenario stopping people already on the property ladder from moving, then it’s up to the first time buyer to help oil the wheels of recovery for the housing market.
For many years this model of owning a home did indeed make sense. Location flexibility was required by only a few employers and as families tended to stay close to their roots, purchasing a house as an investment and something to pass on to the kids (or to sell and fund a retirement) worked out as a great all round option.
Then along came the Eighties’ and with it a housing boom and an even tougher bust with interest rates soaring toward 20%. Then in the late Nineties and most of the Naughties came along another considerable period of house price rises, until the financial turmoil and fall out from the now infamous Sub-Prime lending.
This has left many British families who had gambled their financial futures on house price rises starting to sweat and require debt advice UK. Sure a period of negative growth had hurt a little bit – and indeed a blanket drop of approximately 30% across the UK (London excepted!) did initially look a bit scary.
- Prices were sure to rebound… weren’t they?
- So with no real sign of prices returning to late 2007 highs, where does this leave ‘Alarm Clock Britain’?
- Ok, but what does this actually mean?
It also means that somewhere between 10 & 15% of UK mortgage holders are still in ‘negative equity’ meaning that their possibility of moving is restricted, unless they effectively find another deposit to help them secure a mortgage.
For example, a couple who earn £40,000 between them and bought a £200k house with 100% mortgage (i.e. a £200,000 mortgage) in 2007 could now expect that house to be worth less than £200k today.
If that couple had lost their jobs through redundancies and now wanted to move to a similarly sized house in a new area for a new job, then they could be some thousands of pounds short of the amount needed to repay their original loan.
In addition, under current mortgage lending criteria, most lenders are not offering mortgages for any less than 85-90%.
So, with this kind of scenario stopping people already on the property ladder from moving, then it’s up to the first time buyer to help oil the wheels of recovery for the housing market.
- If you are struggling with personal debt or have mortgage arrears due to debt problems, call Lewis Alexander today using 0800 018 6868, calls are FREE from a land line.
