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House Price rises driven by larger properties

Findaproperty.com’s new house price index suggests that house prices have remained stagnant at the bottom end of the market while strong 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 o.3% for first time buyer properties leaving them still down -4.6% year on year. This would appear to suggest that the difficult lending conditions for first time buyers are continuing to drag down property prices as second times buyers struggle to find a purchaser who can afford their property in the current market.

However there is good news in the bag too with average first time buyer affordability improving dramatically fuelled by the price reduction. Their figures for 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 on August figures leaving the average national asking price at £218,134.

You can see their results and the rest of the overview here Find a property.com’s September House Price Indices

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

The Halifax have just announced a small drop in their house price index for June of 0.5% which on the face of it would suggest that the worst may not yet be over for property values despite promising rises in similar index’s over the past few months.

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

Recent research from Unbiased.co.uk suggests that many people now believe that they can only get between 0.5 and 2.5 times their income when looking to mortgage and that only 24% of the UK believes they could arrange a mortgage for more than 4 times their main income.

The truth is that most lenders will accept four times main income as a guide or perhaps 3.5 times joint income however 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 are holding significant savings and have existing loans which have a short term to run it may be worth considering paying off loans before applying for a mortgage in order to assist your maximum loan and affordability calculation particularly if you also have children.

If you are unsure how much a mortgage lender will consider lending you many now have useful calculators which will give you an indicator of their maximum loan available on their websites.

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