Mortgage equity loans strong as house prices rise

According to recent reports the steady rise in house prices in the UK has seen a recent rise in the number of homeowners borrowing money against the equity in their properties.

House prices in the UK have continued to boom this last year, and many have found themselves sitting on a tidy little nest egg in terms of their equity, giving them the ability to release some of the funds in their property and use it for other purposes such as consolidating expensive unsecured credit, paying for cars and holidays, funding weddings, carrying out home improvements, and various other purposes.

Recent data shows that homeowners borrowing money against the available equity in their homes rose during the third quarter of 2006, with nearly twelve billion pounds borrowed against home equity in the third quarter compared to eleven billion in the second quarter. These loans are granted based on the equity in the borrower’s home, which means the market value of the property minus any outstanding mortgage or secured loans already owed on it. With property prices rising, this has meant that many have seen the equity in their homes rocket, leaving them with even more money tied up their property.

One economist stated: "The significant pick-up in mortgage equity withdrawal in the first three quarters of the year reflects increased confidence in the housing market." House prices in the UK have rocketed over recent years, and even now continue to go up. According to figures released by the Nationwide Building Society, December saw a two year high in terms of house price inflation, with a rise of ten and a half percent.

Home equity loans have become an affordable and effective way for many homeowners to raise cash for a range of purposes, offering lower monthly repayments, generous repayment periods, and increased borrowing power based upon equity and status.

Alisdair Milton
4th January 2007

 

More Information:

• Re-Mortgaging – The How and Why
  There comes a time in the life of most home owners when they stop and ponder on the wisdom of re-mortgaging. Hundreds of thousands of people do it every year. We look at why they do it and how to do it.
• Borrowing Against Your Endowments
  Endowments, that is life assurance policies used to accrue funds with which to pay off your mortgage have been hauled through the gutter in various newspapers and have become the subject of solicitors trying to make even more money out of what they call a scandal. The so called endowment scandal is nothing of the sort.