Owning your own home is a desirable goal for many people. However, over the last few years, property prices have kept on rising most of the time, putting the home-owning dream beyond the reach of many.

Home ownership has fallen in percentage terms and a higher proportion of home owners than ever before are aged over 65. First-time buyers are getting older and some despair of ever being able to buy a property.

Meanwhile, the rental sector has grown rapidly, fuelled in part by the rise of the buy-to-let landlord. In many ways, we’ve become more like our counterparts in other European countries who have traditionally rented, as do the citizens of other major cities like New York.

The housing white paper issued by the government in February, was entitled “Fixing our broken housing market” with good reason. To broaden UK housing options, the white paper proposes a shift away from the historic focus on home ownership, emphasising instead the alternatives such as the construction of more rental property, multi-tenure house building and family-friendly tenancies which are two to three years long.

Although the proposals have been well received, they are unlikely to come to fruition for a few years, so if you’re considering your property options, how do you decide whether to rent or to buy?

Renting gives you flexibility, as you can move to another location and rent a different type  of property pretty much to suit yourself. But it does mean that you aren’t building up valuable equity in your own property as you would if you had bought it. Owning means that you have the satisfaction of knowing that at some point, if you keep making the repayments, you’ll own your home outright.

DO THE SUMS ADD UP?

There’s lots to think about if you want to buy. Saving the deposit is really only the first step. You’ll need to be able to show a potential mortgage lender that you can manage your money competently and that you can comfortably afford the monthly repayments now, and in the future.

You’ll need to think about the costs of buying including legal fees, any stamp duty you’re liable for, property surveys and costs associated with moving. When you own a home, you’ll need to find money for council tax, utilities, maintenance, furniture and home improvement costs too.

Whilst buying a home may be a major goal for many, the chances are you’ll have other ones too. You should also think about contributing to a pension plan, saving for major financial outlays like having a family or starting your own business.

If you’d like some help about establishing your financial goals and planning how to achieve them, then get in touch.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

With the monthly mortgage payment representing a major chunk of the average family budget, it can make sense to shop around from time to time to see if there’s a better, more cost-efficient mortgage deal available to you. According to the Council of Mortgage Lenders¹ , around 36,000 people remortgaged in November alone, up 13% on the year before.

In some cases, homeowners can save hundreds of pounds a year by moving to a more attractive rate with a different lender. Remortgaging can work if your property has increased in value and you want to free up some cash from the equity tied up in your home, or if you want to make higher repayments to shorten your mortgage term. Remortgaging can also be arranged to finance home improvements, to fund the purchase of an investment property or to buy out a joint owners’ share of a property.

If you’re currently nearing the end of your existing deal, then this could be a good time to remortgage. Interest rates are currently at an all-time low, and lenders are continuing to offer competitive deals.

Why remortgaging can make sense

When your fixed-rate deal ends, your lender will automatically move your mortgage on to their Standard Variable Rate (SVR), which as the name suggests can rise and fall. This SVR rate is likely to be less attractive than the rate you were previously on, and can be increased at any time, irrespective of what happens to the Bank of England’s base rate, which is currently 0.25%. So, shopping around before your deal ends could save you money.

Putting the cash to good use

Research from TSB² shows that by remortgaging to a lower fixed rate, homeowners can free up cash for a variety of other uses. Over a third (37%) planned to use the extra money to overpay their mortgage, helping them to become mortgage-free faster, while 30% intended to use the cash to carry out major renovation projects like a loft conversion or an extension.

¹ Council of Mortgage Lenders, Jan 2017
² TSB, Jan 2017

Whilst remortgaging might not be right for everyone, it’s well worth investigating what alternative deals might be available to you, especially if you made saving money one of your new year resolutions. As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.