Five-step property plan for post-Brexit Britain
Following last week's momentous vote for the UK to leave the EU many Britons have been left with a huge number of questions about what the future holds.
The changes likely to be brought about as the country extricates itself from the economic and political union could affect many elements of our day-to-day lives and for homeowners their impact on property and the housing market is a key consideration.
While the long-term impact remains to be seen, online property portal Zoopla has put together a checklist of how to stay on top of your property’s financial housekeeping from right now.
1. Get familiar with your mortgage deal and take action
Dig out your mortgage agreement and remind yourself of the rate you are paying, as well as any tie-ins you are subjected to (the time during which it will cost you to leave).
If you are on your lender’s expensive Standard Variable Rate (SVR), think about locking in to a fixed-rate deal. Then you will have security of payments for a finite period of time to come.
But, as paying an SVR means you’re not tied in to the deal or the lender, make sure you shop around. It’s likely you’ll get a better rate than the one you are paying.
2. Try to reduce your loan to value
No one knows exactly what will happen to house prices post-Brexit. But one thing’s for sure – the less you owe against your home the better.
If you have savings sitting in an account earning next to nothing in interest, it could make sense to use that cash to pay a chunk off your mortgage instead. Even if you are tied into your current deal, most lenders allow overpayments of up to 10 per cent a year. Call your lender and find out where you stand.
3. Keep your cool
Any knee-jerk reaction to sell up your property on the back of the leave vote could be foolhardy. Even if the waves of uncertainty take a while to calm, history has taught us that over the long-term, the value of property has risen. In fact, UK property values have climbed a staggering £218,691 (or 276 per cent) in the last two decades, according to Zoopla.
Your primary concern should be that you can comfortably afford repayments on your home – not what it’s worth.
4. Use the home you have
No one can predict it now but, even if life outside of the EU ends up putting you and your home in a financial tight spot, there may be measures you can take to ride out the storm.
For example, under the Government’s Rent a Room scheme, you can now earn £7,500 a year in rental income without paying tax on the income.
And, if you need more space but can’t afford the move upwards, you could stay put and extend or improve your home instead.
5. Remember house prices are relative
If you need to move for life reasons, don’t worry about the outcome. Even if you achieve a slightly lower price for your own home, chances are you’ll be charged less for the next one too.
Irrespective of the state of the housing market and the EU, a good estate agent will market your home as widely and effectively as possible – and get you the best price. Just make sure you choose a good one.