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 the more preferred house, 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 initial pain make even more sense when you take into account many house purchase costs you will never recover such as any redecorations, conveyancing, fee and the big one – Stamp Duty.
At times borrowing an extra £50,000 may only add £175pm to the mortgage payment. And many borrowers based their borrowing appetite on the monthly repayment. But the iss is when rates go up – as we have seen. This extra amount will cost more and so will the rest of the mortgage – you possibly find yourself paying an extra £600pm for example. Ad 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 with government schemes such as Help To Buy 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!
And don’t forget to protect yourself, your family and your assets!
Max Capital forms part of Max Mortgages Ltd and has been established to help protect our clients’ protection interests. Through carful 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.
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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.