Applying For Mortgages

The Times Business listed a number of reasons to “cheer” over falling house prices. Sure, the value of your home will probably continue to drop the rest of the year and possibly next but could there be a silver lining amongst the ominous clouds of bad financial news?

Chin up, here are a few positive reasons to rejoice:

• First-time buyers will benefit - As house prices fall, housing becomes more affordable for first-time buyers. Recent changes in Stamp Duty, although temporary, could help as long as buy-to-let investors don’t grab the deals first.
• Time for reality – Now that people realise their home’s equity may not be the golden egg for retirement, maybe people will begin to diversify their investments.
• No more guessing at a crash – Prior to current falling house prices many homeowners knew that the incredible property bubble would have to plateau and dip at some point. Well, it’s finally upon us so no more guessing when it might happen.
• Lower divorce rate? – According to research by Savills Finance, couples on the verge are less apt to file for divorce feeling it less affordable than during property boom eras. I suppose that’s logical but still a bit odd.
• Less pressure to move to something bigger – Homeowners may feel less pressure to move to a bigger, better home and instead can focus on improving the one they have with less costly home improvements. Meanwhile, if done right, this should add value to your home.
• Perhaps your neighbourhood hasn’t been hit that bad? - Where you live will determine how much your property value has decreased. It may not be as bad as you think.
• Lower Inheritance Tax – If you recently inherited property, that has been hit by falling house prices, and the total value of your estate falls below £312,000 you could avoid Inheritance Tax.
• Less stamp duty – If you plan on buying a property that’s currently valued at below the £175,000 threshold then you can avoid paying tax. Since we don’t know how long this stamp duty holiday will last, it will definitely help some buyers in the meantime.
• Realistic mortgages – Perhaps one of the biggest lessons to learn is to avoid borrowing sums that are too difficult to repay, especially pre-credit-crunch mortgages like the 125% LTV products. Saving for a deposit is difficult but will help you reduce your monthly mortgage repayments and lower your overall debts borrowed. The last thing any homeowner wants to be stuck with is negative equity.

There are additional reasons to “rejoice” over at the original article however, here we’ve highlighted some of the more important ones.

What do you think? Shall we pop the champagne and celebrate the lessons and opportunities in today’s property market? There’s always a silver lining, right?