Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage
There are times when it can be worth taking on more borrowing as it may allow you to buy a more preferred house with more space, room for expansion, a better location as well as other options that a less costly house may not provide you. And as this is an important purchase, you need to try to get it right! Thus using a higher Loan To Value product coupled with a larger loan amount, although it may increase your monthly payment, this could be an affordable and justified decision.
Borrowing more may push your mortgage to a higher LTV% product band. This will often attract a higher interest rate not to mention the cost of the extra monies itself. But this may be acceptable. You can look to move to a cheaper price point as well as making overpayments when possible in the initial years. This short term pain may make even more sense when you take into account many house purchase costs you will never recover such as any redecorations, conveyancing, fees and the big one – Stamp Duty.
At times borrowing an extra £50,000 may only add £175pm to the mortgage payment. And many borrowers base their borrowing appetite on the monthly repayment. But the issue is when rates go up – as we have seen. This extra amount will cost more and so will the rest of the mortgage – you could possibly find yourself paying an extra £600pm for example. Add the cost of living, fuel, taxes and suddenly this becomes a major worry or even unaffordable. A margin for such should always be factored in.
Even when government schemes such as Help To Buy were available we made it clear these should only be used if one has good sufficient income but simply not have had the chance to save up the required deposit. H2B brought some time to do just that. But many used that option to buy properties that were basically above their budget and now are stuck in a H2B contract or in some negative equity as they still don’t have the savings or the income to cover the full mortgage with the H2B element!
Many have been able to make their initial residential purchases into an investment property and moved on. Due to their positive change in personal circumstances, they have retained a property and used that to help with an onward purchase. Otherwise it has just become a self-financing long term investment property in the background for their future. Or off course they may choose to stay put and purchase an additional property for investment purposes.
And don’t forget to protect yourself, your family and your assets!
📞 0330 3112 707
For information regarding Personal or Business Protection:
Max Capital forms part of Max Mortgages Ltd and has been established to help protect our clients’ protection interests. Through careful assessment, research and on going support, Max Capital works to ensure suitable solutions are considered based on individual circumstances whilst Max Mortgages focuses on your borrowing needs.
Info on Mortgages Click Here
Protection plans are subject to terms, conditions, exclusions and underwriting.
Not all claims will be accepted, and the availability and cost of cover depends on individual circumstances.