This time last year, millions of homeowners and first-time buyers were more than willing to throw caution to the wind.
If it meant getting that first foot on the property ladder, first-time buyers were willing to jump through as many hoops as necessary to make it happen. This included paying enormous deposits and leaving themselves with little to no financial safety net, so as to qualify for ultra-low introductory fixed-rate deals.
Elsewhere, individuals and families looking to relocate did what they could to make things happen as quickly as possible, as property price increases showed no sign of relenting. It became a case of ‘now or never’ in the minds of those concerned, who fought tooth and nail to pick up the very few affordable properties available in desirable regions.
Today, it is an entirely different picture. The unprecedented living-cost crisis has prompted millions to rethink their major purchase and investment decisions. Home purchases and relocations have been put on ice indefinitely, as the public collectively struggles to make ends meet.
Those who were ‘lucky’ enough to qualify for super-low 2% fixed-rate introductory mortgages over the last couple of years now face the prospect of being hammed with a 300% increase. Mortgage rates in general have skyrocketed, millions of households cannot afford to pay their energy bills and the dream of getting on the property ladder looks set to remain just that for many (if not most) first-time buyers.
Downsizing for Savings
We now know that while the energy price cap will be held in place for at least another year, it will be increased once again to £3,000 next April. Little wonder, therefore, why the prospect of downsizing has become so appealing to those who live in homes much larger than they need to be where energy costs have already become insurmountable.
With mortgage rates set to climb further and living costs only headed in entirely the wrong direction, now may not be the time to get locked into a wholly unaffordable mortgage. The whole point of downsizing is to save money – not find yourself lumped with another crippling long-term debt.
This is why regulated bridging finance has become a popular choice for households looking to downsize (and for relocation purposes in general). In fact, the latest Bridging Trends report suggests that opting out of conventional property chains is now the number-one use for bridging finance in the UK.
With bridging loans, a homeowner has the opportunity to purchase their next property outright for cash. They borrow against their current home in the form of a specialist secured loan, which can be arranged and accessed within a few days. These funds are then used to purchase their next home (perhaps a smaller property with a lower market price) and the full loan balance is repaid when their previous property sells.
As bridging finance attach a monthly rate of interest (which can be as low as 0.5%), it can be exponentially more cost-effective than taking out a long-term mortgage. Not to mention, much quicker and easy to arrange in the first place, with far more flexible eligibility requirements.
Downsizing with bridging finance can pave the way for all the savings associated with moving into a smaller home, without the costs and complications of a conventional mortgage. It can also be the ideal facility to beat competing bidders to the punch, where high-demand properties in desirable parts of the country are concerned.
Just as long as you have built up sufficient equity in your current home, you may find bridging a far more flexible, affordable and convenient option than a traditional mortgage loan.For more information on any of the above or to discuss the potential benefits of bridging loans in more detail, call anytime for an obligation-free consultation.