If the media is to be believed and a double dip recession really is just around the corner, what are the consequences likely to be for homeowners? And could the current financial climate even be turned to your advantage?
Should the economy go into a second recession in a handful of years, it’s likely that property prices will fall. This is bad news for homeowners, however, on the plus side the Bank of England will prolong it’s low interest rates. At the same time, a worsening economic climate will put pressure on the banks who may make it harder than ever to borrow.
The rental market will probably stay fairly buoyant, however, as fewer people can afford to get onto the housing market, whilst some will sell their houses and move into rented accommodation.
For turning the financial climate to your advantage, you first need to make sure your finances are sound first. Use companies like CreditExpert (view credit report online), this will give you a very clear idea not of exactly what your finances are like, but of how lenders will perceive you, which is going to be very important.
First of all, make sure you have enough equity in your home, small developments can increase the value of your home, and now is a cheap time to borrow. Consider remortgaging to secure enough cash to make significant investments to your home, and talk to an estate agent before you do anything, to make sure that the changes you’re planning will actually give you extra equity.
If you don’t have any concerns on your own home, look for promising projects, particularly homes that are currently empty and may be owned by a bank. You should get a good deal directly from a bank, and if your credit rating is good enough, you might even get a mortgage out of them as well.
Don’t rush into anything immediately, prepare well and make sure you’ve got everything you need from a good plan, to good finances, to good builders, and then wait and see. The worst thing you could do is to invest now, and then see house prices take a fall, best to wait and invest at the bottom.
An alternative, but maybe stressful idea, would be to do up your own home and then rent it out whilst you move into smaller, cheaper accommodation. This will help you get ahead on mortgage repayments, or to cover costs of any building work and could be a great way of increasing your income.
Last of all, keep a close eye on housing prices, there are two national house price indicators of which the Halifax offering is the best known. Look here for more details.