Equity gains in house prices are cashed in by homeowners
Lucky homeowners, who have gained from the increase of property prices over the past 12 months, are aiming to cash in over £9,000 of equity gains by remortgaging their property.
According to the Mortgage Search Tracker from Mortgage Advice Bureau the typical homeowner looking to remortgage their property in the first quarter of 2015 had a home worth £248,191. This in an increase of 7.9%, a rise that is roughly in line with annual house price inflations, which offers homeowners an extra £18,091 of equity in their property.
The data from the study suggests that homeowners are looking to cash in the equity on their homes by remortgaging, resulting in them borrowing an additional £9,060 more on average than a year ago.
As well as seeking bigger loans, customers who are looking into the remortgaging option are also interested in stretching their repayments over a longer period of time. In Q1 of 2014 76% of homeowners searched for a minimum 25 year loan, this has increased by 10% (86%) in the first quarter of 2015.
Head of lending at Mortgage Advice Bureau, Brian Murphy, said:
“Releasing cash is often a major incentive for people to consider remortgaging, whether to consolidate other debts, pay for home improvements or finance other spending.
“The fact that many people’s properties have gained in value over the last year offers some the chance to take the same percentage loan that they would have done if they remortgaged 12 months ago and give themselves a significant cash boost.
“Another benefit of rising house prices is that fewer people will be trapped in negative equity and more people will be in a position to negotiate a remortgage deal. Those who are not motivated to release cash can still make big gains by cutting their rates by taking their pick of the attractive deals on offer.”
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