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Tag: Affordability

House price rises driven by larger properties

Findaproperty.com’s new house price index suggests that house prices have remained stagnant at the bottom of the market while large rises in higher-value properties are propping up the major indices.

Their figures, collated from average asking prices on the website over the past month, show high-value properties climbing at 6.6% annually against a monthly rise of 0.3% for first-time buyer properties, leaving them still down -4.6% year on year.

That would suggest that difficult lending conditions for first-time buyers continue to drag down property prices as second times buyers struggle to find a buyer who can afford their property in the current market.

However, there is good news in the bag as average first-time buyer affordability has improved dramatically, fuelled by the price reduction.

Their figures for the affordability gap, or the average deposit required, show a drop to £55,700 or 1.74 times gross household income, against £71,000 or 2.8 times gross household income in January 2008.

Overall the indices showed a 0.2% rise over the August figures, leaving the average national asking price at £218,134.

Mortgage Broker Q&A; Do benefits count as income?

In Mortgage Adviser Q & A we look at some the common questions answered by mortgage brokers on a day to day basis.

Question; Will lenders consider my benefits as income when assessing affordability?

Most lenders will consider some types of benefits as income and this varies from lender to lender. For example it is quite common for child tax credits to be considered as income but child benefit not to be, it is also quite common for other income such as regularly received child maintenance payments to be considered. Again though how much is applied will be specific to each individual lender.

Most lenders will however require you to have some form of income apart from benefits as well, this is because year by year benefits will be changed in the budget and your entitlement to a benefit cannot be guaranteed in the long term.

For information about which benefits are considered as income with different lenders seek independent mortgage advice.

Things aren’t always as bad as they seem

Halifax has just announced a drop in their house price index for June of 0.5%. This suggests that the worst may not yet be over for property values, despite promising rises in similar indexes over the past few months.

But there is a general feeling among the industry now; that the bottom is out, and while prices are likely to remain relatively stable for at least the next year due to a lack of mortgage products, there is some good news for people looking to borrow.

Recent research from Unbiased.co.uk suggests that many people now believe they can only borrow between 0.5 and 2.5 times their income when arranging a mortgage.

And only 24% of the UK population believed they could get a mortgage for more than four times their income.

The truth is that most lenders would accept four or more times the primary income as a guide, or perhaps 3.5 times joint income. The difficulty is really for those with dependent children, which has started to play a more significant role in lenders’ assessment of affordability and those people who have existing credit commitments which will continue to run after the mortgage completes.

If you have significant savings and existing loans, which have a short term to run, it may be worth considering paying off loans before applying for a mortgage. To assist your maximum loan and affordability calculation, particularly if you have children.

If you are unsure how much a mortgage lender will consider lending you, many now have calculators, which indicate the maximum loan, available on their websites, but the results of these are often questionably simplistic.

So if you want to know how much you can borrow, call a mortgage broker.

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