3 minute read
Mortgages and finance
This season, spring clean your finances with our experts’ advice on remortgaging and making the most of your assets. And if money matters seem a bit complicated, our straight-talking guide will clear up any confusion.
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Your property may be repossessed if you do not keep up with repayments on your mortgage. To apply, you must be 18+ and resident in Guernsey. All mortgages are subject to status and valuation. The maximum amount you can borrow will depend on your individual financial situation, your other circumstances, the property you wish to buy and the type of mortgage you choose.
Why spring is the perfect time to re-mortgage
Spring is in the air. Fresh buds are blooming, crops are growing, and fauna is thriving. But it is not just nature that finds itself reenergised at this time of year.
The spring season is typically the most active period for the property industry. While the pandemic has thrown this trend slightly off kilter, with bumper demand over the last two years, as spring approaches the expectation for 2022 remains strong and re-mortgaging, in particular, is predicted to maintain its popularity.
A more favourable arrangement
Unsurprisingly, almost a third of respondents in Butterfield’s 2021 Channel Islands Mortgage Survey, who had recently remortgaged, reported that the end of a fixed term period prompted them to do so. Interest rates hit a historic low at the beginning of the pandemic and, despite the Bank of England raising the base rate to try and combat inflation, they currently remain relatively low. People with fixed rate mortgages arranged in the pre-pandemic years have yet to take advantage of these lower rates. With their terms now maturing, there will be an influx of homeowners looking to get more out of their mortgage before interest rates increase further. Relatedly, so far in 2022 there has been a greater demand for longer-term fixed mortgage products. These increased timescales offer fixed affordability and aid financial planning for a period of five years, 10 years or more.
Realising and pursuing property potential
Despite the pandemic bringing about global uncertainty, it did not stop people looking for their dream home. The local property market, like many other places, was extremely active, which in turn drove up prices. Guernsey’s average property price soared to highs of £550,893 (as of Q4 2021), an 11.7% increase on the corresponding quarter in 2020. As property value increases, the owner increases their equity stake in their home which in turn opens up opportunities.
Equity release was found to be a top reason why people chose to re-mortgage (30%), enabling people to make home improvements from garden developments to extensions and creating a home office. Builders and other construction workers have been in high demand since the pandemic, causing a delay for some people’s projects which helps to explain why there is an increase in re-mortgaging now. Others are choosing to use the equity to buy another property as an investment, upsize their current home or downsize to reduce monthly repayments.
Time to spring into action
Given the number of clear advantages, re-mortgaging is something which should be at the forefront of homeowners’ minds. So, it is time to harness that spring vitality and open your mind to the possibilities.
