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Over half of UK buyers spend more than intended on a new home
More than half of British people spend at least 10% more than they intended when buying a new home and many end up with an extra bedroom, research has found. In a poll they confessed that they are influenced by their emotions over practical needs which results in spending more, according to the survey by Online Mortgage Advisor. When asked if they changed or widened their original budget some 64% said they did and 89% took into account properties that were more expensive than they originally planned to. Some 51% said they went at least 10% over budget, 18% stayed within 10% of their original budget, 13% were exactly on budget and 11% were within 10% or less. Only 7% bought a house for more than 10% less than they originally intended. Of those who spent more 68% said it was because they fell in love with a specific house and had to have it, 47% paid extra for the right location, 33% said their partner encouraged them to spend more, 25% bought a bigger house as it was better value for money and 29% said they were encouraged by an estate agent while 6% said it was down to their children. ‘Buying the right house within budget can be a really difficult task, especially in a growing market where property prices are still increasing in most parts of the UK. Often people will set out to buy based on price, but then check to see what they could get if “they just spent a bit more,’ said Pete Mugleston, director of Online Mortgage Advisor. ‘From then the decision becomes less about price and more emotionally driven, and often people will either come across their dream home or find it hard to go push the budget down again after seeing what they can purchase with a small increase,’ he pointed out. Continue reading
Scottish property market set to see annual growth of 3% in 2016
The overall residential market in Scotland has shown continued growth, with an 8% annual increase in the number of residential transactions during the year ending in the first quarter of 2016. The market was supported by an increase in cash buyers and buy to let purchasers, boosted by increased levels of equity generated from core hotspots, particularly among older buyers, according to the latest analysis report from Savills. It also says that various Help to Buy schemes and the gently improving economy, leading to increased consumer confidence, are also combining to support the market. Market growth is continuing to spread out to locations that were lagging following the housing market downturn. These include West Lothian, East Ayrshire, North Lanarkshire and Glasgow City, where the annual growth in transactions was higher than the figure for Scotland as a whole. The report says that this is mainly due to an increase in house building, coupled with attainable house prices and improving transport links. Annual transactional growth in traditional hotspots and commuter locations, such as Renfrewshire, East Lothian and Midlothian, as well as the market hub of Edinburgh, also exceeded the figure for Scotland as a whole. Savills is forecasting annual growth of 3% in Scottish mainstream values by the end of 2016. ‘We expect values in city locations and core hotspots to outperform the figure for Scotland as a whole. Stricter lending conditions and a possible rise in mortgage rates could limit capacity for strong price growth and transactional growth. This is likely to keep exposure to risky mortgage debt under control,’ it explains. In the prime market Scotland’s Land and Buildings Transaction Tax (LBTT) continues to have a significant impact following its introduction in April 2015. Over the last 12 months, the prime market above £400,000 witnessed an overall shortfall in activity, mainly due to higher rates of taxation. However, since the end of 2015, the prime market has adjusted in the city hubs of Edinburgh and Glasgow. Furthermore, prime market strength is spreading from the hubs into traditional suburbs and commuter areas The number of prime second hand sales at £400,000 and above in Scotland fell annually by 14% to 3,131 during the year ending in the first quarter of 2016 as the market continues to adjust to higher rates of taxation. Despite this drop, prime activity was 13% higher than the five-year annual average of 2,762 sales. The prime market was led by the core city hotspots of Edinburgh and Glasgow. Prime activity in Stirlingshire and the Lothians region surrounding Edinburgh bucked the national trend, benefitting from relative affordability and improving transport links. Furthermore, demand for family homes in areas with top performing state schools remains buoyant. According to Savills Prime Residential Index, overall values in Scotland remained unchanged, with a slight 0.4% year on year increase at the end of March 2016. Further examination of the Savills Index shows a widening gap between overall property values in city and town… Continue reading
Survey reveals lack of knowledge in UK about home insurance
Some 1.6 million UK home owners have bought home insurance from their lender and many mistakenly believe they cannot switch for a better deal, according to a new survey. Some 30% or 466,200 households believe their home has to be insured with their mortgage lender as a condition of the loan and 6% were told by their lender that it was a mandatory purchase. On top of this 24% think switching away from their lender’s insurance will invalidate their mortgage, according to the survey from Gocompare Home Insurance. Overall it found that 14% of home owners arranged their home insurance through their mortgage lender and 30%, almost half a million home owners, believed that they had to arrange their home insurance through their mortgage lender as a condition of their mortgage deal. And 24% of borrowers who arranged their insurance with their lender think that switching their insurance to another provider will invalidate their mortgage while 12% say they felt under pressure to buy their lender’s home insurance and 6% said they were told by their mortgage provider that they had to. Protecting a property with adequate buildings insurance, typically against fire, flooding, subsidence and storm damage, is as a requirement made by all mortgage lenders. Buildings insurance provides financial protection for the borrower, and ultimately the lender, from damage to the main structure of the home. While most lenders offer home insurance, borrowers are not obliged to buy it for them. However, the practice of compulsory home insurance tied-in mortgage deals was never formally outlawed despite promises to do so in the late 1990s. When questioned why they had opted to buy their lender’s home insurance, the survey revealed a mixture of misunderstanding, misplaced trust in their mortgage lender and consumer apathy. For example, 14% thought buying their lender’s home insurance might help with their mortgage application, 9% said they didn’t realise they could buy cover elsewhere, 22% said that their lender gave reassurances that the product was good value, 50% think that their mortgage lender provides the best value cover for their home insurance and 49% had opted to do so out of convenience. The survey also found that 72% hadn’t compared products and prices offered by other providers and 34% of home owners who arranged cover through their lender didn’t check cover levels and excesses to make sure they were buying the right policy. According to statistics published earlier this year by the Association of British Insurers, the main reasons for household insurance claims being rejected included the claim value being below the policy excess and the incident not being adequately covered by the policy. ‘We were shocked to find that so many people still think that their mortgage offer is conditional on buying their lender’s home insurance, and that a significant minority are essentially in a mortgage linked insurance trap, believing that switching away from their lender’s insurance will invalidate their mortgage,’ said Ben Wilson from Gocompare Home Insurance. ‘We… Continue reading
