buy-to-let mortgage

How property owners can profit from rising house prices without selling

House prices have held strong over recent months, but not all homeowners and investors want to sell up right now. For those who want to release cash from their properties, remortgaging could be the answer.

The top reasons people choose to remortgage their properties are to reduce monthly payments, fund home improvements or release cash to relieve financial anxiety. This is according to findings from a recent NatWest survey looking at borrowing habits in the UK.

Often when people remortgage – which involves taking out a new loan with a lender – they find their monthly payments decrease. This is the case for almost three quarters (74%) of people in the survey. Of these, some saw their monthly outgoings reduce significantly, with 38% reporting a 10% reduction. Almost one in 10 people said they had saved up to 50% on their monthly payments by remortgaging.

Looking at it from a topical point of view, coronavirus has increased some peoples’ financial worries. For almost one in 10 respondents (8%), a remortgage has helped to relieve their anxieties around the situation.

Rising house prices benefit borrowers

Many property owners coming to the end of their current product will find their home has risen in value. The NatWest survey found that 62% of people who remortgaged had seen their property value increase. Around 30% said their home’s value had gone up by 10-20%, while 8% said it had risen by 20% or more.

Despite the coronavirus outbreak, activity in the housing market remains high. However, some owners who had thought about selling pre-Covid have had second thoughts.

According to the data, around 47% of people are waiting until things are clearer financially. A further 38% have postponed sales because they don’t think it will be financially worth it right now. For such property owners, remortgaging could be the next best option, as many will be able to secure better deals on a higher property value.

Property investors can benefit too

While the survey was carried out across homeowners, the same concept applies to non-owner-occupiers such as property investors and landlords. For many, borrowing costs are a big factor when weighing up the profitability of an investment.

Many investors use a remortgage to boost their property portfolio. This enables the landlord to keep their existing property and invest in a new one.

Furthermore, remortgaging is a popular way to fund home improvements. NatWest says around a fifth of owners have released cash this way in order to do up their property. Additionally, 19% of people have used money released through remortgaging to make their homes more sustainable and energy efficient.

For landlords, such property improvements can have a big effect when it comes to attracting tenants. A refurbished property will be much more desirable and normally demands higher rents. What’s more, the government’s green home grant can be be used in addition to cash from a remortgage to improve a property. For full information on the scheme, see the government’s website.

BuyAssociation has a range of property investment opportunities available across the UK. We have options for both investors and owner-occupiers, so get in touch for more information. We can also put you in touch with one of our independent mortgage expert partners to find the best borrowing options for you.

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