How to sell (or buy) a home without an estate agent

With the average highstreet estate agent charging between 1 and 3% of your property price to sell your home, it’s well worth investigating alternative ways to sell your house and save some money.

And if you’re looking to buy, it’s worth knowing about some of these alternative home selling methods too, so you know where to look to find a good deal!

Here’s how to buy or sell a home without using a traditional estate agent:

1. Use an online estate agent
2. Do it (mostly) yourself
3. Ebay and Gumtree
4. Facebook
5. Buy from (or sell to) a friend
6. Go chain-free with an advance
7. Raffles
8. Auctions
9. Offer a freebie

Use an online estate agent

Rightmove and Zoopla provide massive online directories for property sales and lettings. Getting your property listed on one of these sites is a great way to sell – but you can’t upload the listing yourself; only estate agents can do it.

The good news is, you can now find online-only estate agents that provide all the usual services of a traditional highstreet agent – photography, viewings, etc. – but at a lower price point.

Do it (mostly) yourself

An alternative is to use a company like HouseSimple or Emoov who will list your property on the main property websites like Rightmove, Zoopla and PrimeLocation – but you’ll usually have to manage more of the process yourself, such as viewings.

For example, HouseSimple charges £995 upfront, which would save you around £6,500 on the sale of a £500,000 property, for which you get a home visit for valuation and management of the sale through to completion. You can pay extra for managed viewings, mortgage broking, etc.

Purple Bricks offers a fixed fee option for £849 (£1,199 in London) with the option to have accompanied viewings for an extra £300.

Emoov.co.uk charges £795 upfront (£995 for London and inner M25) or £1,495 if you pay on completion of the sale (London £1,995), with no fee charged if the property is not sold.

Ebay and Gumtree

There are currently more than 600 property listings on Gumtree and 1,200 homes listed on eBay. However, many of them are overseas properties and some of them uploaded by estate agencies rather than private sellers.

If you are hoping to sell your house online without an agency, bear in mind that while it’s simple and cheap to upload a few photographs of your home, you’ll also need to arrange viewings and negotiate the price yourself.

Facebook

You could set up a Facebook page for your property but it’s unlikely to reach much of your target audience. However, if you live in a popular area where property sells quickly, you could advertise your home on a local Facebook group which would generate local interest.

Or you could live stream a virtual open day via Periscope…

Buy from (or sell to) a friend

It’s also possible to sell to a friend or private buyer, or from a local builder while they are doing up the house but before it goes on the market.

The advantage of this approach is that you are unlikely to get gazumped by other potential buyers and you can move at a speed that suits you both.

You’ll need to agree a mutually acceptable price, which you might agree on after valuations from a couple of local estate agents.

You’ll need to appoint your own solicitors, as it is not advisable to try to do the legal work and searches yourself. Your mortgage company will want to carry out their own valuation.

Even though you may know the house well, it could be worth organising a survey, as there may be issues that the buyer is unaware of that might affect the condition of the property going forward.

When it goes well, this can be a cost-effective and lower-stress option than normal house buying. It gets tricky if there is something wrong with the property and you want the seller – who might also be your friend – to reduce the price. That’s why it’s better to have the discussion about what to do if a problem comes up in the survey as early as possible, and before you have committed a lot of money in terms of solicitor fees.

Go chain-free with an advance

If you are trying to sell your home but you’re stuck in a chain, then there are companies that will advance you up to 98% of your home’s market value in order to enable you to proceed with your purchase.

It’s not a cheap option, though. For example, Nested will advance you 95% of your home’s value, so you can look around for a new property chain-free. In the background, Nested will try to sell your property like an estate agent. But if you take the advance before your property sells, the fee to Nested is 3.5%; otherwise it’s 2.5%.

It is aimed at people whose onward purchase might fall through if they can’t sell their current home, or who need to sell their home quickly, and as an alternative to a bridging loan.

Raffles

There have been a number of houses which have hit the headlines because they have been offered for sale as a prize in a raffle.

This approach requires caution. Unless you run the raffle in the correct way you could be liable for fines and even imprisonment under the complex rules which govern lotteries and raffles by falling foul of the Gambling Act 2005.

The Gambling Commission points out that many homeowners need to be aware of staying within the law.

You’ll need to pay for proper legal advice and make it clear what happens if you don’t sell enough tickets.

The scheme can work – Melling Manor was sold after former owner Dunston Low sold £2 tickets and raised £900,000 – but other property online raffles have been stopped by local councils and you need to have a fall-back plan if your campaign doesn’t sell enough tickets.

Auctions

Generally speaking, property sold at auction tends to be either in need of a lot of renovation work, difficult to value, hard to get a mortgage for, or very unusual.

If you are buying, it’s a place to pick up a potential bargain, although most auction properties come with some potential issues and so it’s better for experienced buyers or people looking to develop properties for letting. Once the hammer has fallen, you are obliged to buy, whatever state it is in, so do your research properly and in advance.

For sellers, it is an expensive way to put your property into the open market, with commissions likely to be in the 2.5% range. For this reason, it’s not the best option for traditional sales.

Leaflet the locals

If you have your eye on a particular area or street, and you are prepared to do a private sale, then you could put your contact details through the letter boxes of the current owners.

It’s a strategy which works in sought-after streets where houses are snapped up quickly or sold within hours of coming onto the market. Be prepared to have your finances in place, and to use a solicitor to do the conveyancing.

You can also approach local builders who are renovating a house on a street you are interested in. They may be willing to sell before the property is completed to maximise cash flow, although you’ll probably have to pay asking price.

Offer a freebie

If you are really keen to sell, you could sweeten the deal by throwing in extras, such as a car, furniture, or even pets, although this can also put potential buyers off.

More information

Citizens Advice has some further info on how to organise a private sale. Here on Bankrate you can read our complete mortgage guide, learn about stamp duty, and whether you should get a mortgage broker or go direct.

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Last updated: 30 January, 2019

When should I remortgage?

Remortgaging is when you get a new mortgage on your current home. It’s a very important decision that could impact your finances by thousands of pounds every year.

Why should I remortgage?

Before you look at the when, you need to first consider the why. Why should you remortgage if you can afford the monthly repayments, are happy with your lender and are not planning to move house?

We go into this in detail in our Should I remortgage? guide, but in brief:

1. Your current deal is about to end/has already ended (which most likely means you’ll be on your lender’s costly standard variable rate, known as SVR)
2. You want to save money
3. You want to release some of the equity in your home to make changes to it, like renovations or an extension
4. You want to pay off your mortgage earlier
5. The value of your property has gone up significantly
6. You want to switch from an interest-only to a repayment mortgage
7. Economic uncertainty

When should I remortgage?

In general, you should start looking for a new mortgage around three months before the end of your current mortgage’s promotional deal. For example, if you have a three-year fixed rate mortgage, you should start shopping around when you’re 33 months into the 36-month promotional period.

When a lender offers you a mortgage, you usually have between three and six months to accept it – after that, you’ll have to reapply. That’s why you should start looking for a new mortgage when your current mortgage deal has around three months to go.

If you don’t find a new deal, you’ll automatically revert onto your lender’s SVR when your promotional period ends, which is often far more expensive than if you’d shopped around for a new fixed rate or discount rate mortgage. In fact, mortgage broker London & Country recently discovered that a third of mortgage customers are on their lender’s SVR.

According to financial data site Moneyfacts, the average two-year fixed rate mortgage in the UK is around 2.52% compared to the average SVR which is 4.9%. Using these figures as examples, if you had a £300,000 repayment mortgage over a 25 year term, your monthly payments would go from £1,349 to £1,736 – that’s an increase of almost £400 each month, or £4,800 per year.

Of course, with Brexit looming the economy is currently somewhat unpredictable, so it could be beneficial to see what mortgage deals are out there even if yours isn’t coming to an end. But don’t forget to look at all the costs because early repayment charges (to leave your mortgage before it ends) and set-up or arrangement fees (payable when you’re setting up a new mortgage) could cancel out the financial benefit of getting a new, low fixed-rate offer.

This need for security is made clear by the fact there has recently been an increase in popularity for longer-term fixes, like five and 10 years as opposed to just two or three. Plus, the similarity between the two-year (2.52%) and five-year (2.93%) rates shows how lenders are reacting to this shift from borrowers and how hard they are trying to remain competitive.

Mortgage analytics specialist at Moneyfacts, Darren Cook, says: “We have seen the margin between the average two-year fixed and five-year fixed rates narrow as competition gathers pace in the five-year fixed rate landscape. Historically, competition on rates has been strong in the two-year fixed rate market and it seems that rates in this sector have been cut to a bare minimum and the five-year fixed rate sector is the next option for mortgage providers to compete in, causing rates to fall.”

Fixing your mortgage for longer not only means you have prolonged certainty when it comes to your payments, but it also means you will not need to think about changing your mortgage for longer periods of time. However, if you’re unsure whether or not you’ll remain in your current property for the length of the new mortgage deal, make sure it has the added bonus of being portable, which means you can take it from one property to another without (or with minimal) fees.

How to get the best remortgage deals

When it comes to remortgaging, your loan to value (LTV) is primarily based on the amount of equity in your home – plus, if you have some savings put aside, you can put those into the new mortgage deal as well.

Much in the same way that a larger deposit gives you access to better mortgage rates on your first home, more equity equates to lower interest rates. If you have a repayment mortgage, and the value of your home has stayed the same or gone up, you should have a decent chunk of equity in your home.

For example: you originally bought a £200,000 property with a £20,000 deposit – i.e. you borrowed £180,000 at an LTV of 90%. Since then, your property has increased in value to £250,000. You’ve also paid off £10,000 of your mortgage debt through your monthly repayments, so you only owe the lender £170,000. This means your total equity in your home is now £80,000: £20,000 from the deposit, plus £10,000 in debt repayments, and a final £50,000 from the increase in property value.

With £80,000 in equity on a £250,000 home, and only £170,000 left to repay, you’re in a very strong position for remortgaging. You will have an LTV of 68%, which will give you access to some of the best mortgage rates. If you contributed another £7,500 – from a savings account, perhaps – then your LTV would move down to 65%, where you likely get an even better mortgage rate!

Why can’t I remortgage?

If the value of your property has dipped below your outstanding mortgage debt, you’ll have what’s known as negative equity. For instance: In 2017, you bought a house for £300,000 with a £270,000 mortgage on a two-year fixed-rate deal. The deal is coming to an end, but the property has decreased in value to £250,000.

Most lenders will not allow you change mortgages while you’re in negative equity, so you could end up paying its costly SVR until the property goes up in value.

One way to partially remedy this in the interim is to overpay your mortgage, that is, make payments over the monthly requirements. Generally speaking, this should be doable if you’re already on the lender’s SVR (higher rates usually mean greater flexibility) – but if you’re in negative equity whilst on a fixed-rate deal, you must check the terms and conditions before you overpay. Although most fixed-rate deals allow you to overpay by 10% per year, they’ll charge you a penalty for anything over that.

Try to remortgage to a cheaper deal as soon as you’re out of negative equity.

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Last updated: 28 April, 2019

How Much Can I Borrow? Mortgage Affordability Calculator

Use our how much can I borrow calculator to work out how much you can borrow in the UK as a first time buyer, moving home or remortgager, even with no deposit or bad credit. Explore our guide to learn how much you can afford based on your financial situation. Plus, understand how lenders assess your affordability and decide how much you can borrow in the UK.

How much mortgage can I get?

How much you can borrow for a mortgage in the UK is generally a maximum of 5 times your income - or 5 times your joint income, if you're applying for a mortgage with someone else.

Use the how much can I borrow mortgage affordability calculator above for an estimation on how big a mortgage you can get in the UK.

Mortgage lenders always conduct affordability checks before loaning you any money to ensure you can meet the monthly repayments. Since the 2008 financial crash, mortgage lenders are far more strict about who they lend to. They judge your affordability based on an in depth discovery of your income, all your outgoings and your total debt. They also scrutinise your credit file.

Lenders also want to know you could afford the repayments should the interest rates increase by 4% above the Bank of England base rate. This is known as stress testing.

You may only be able to get the maximum amount if you already have a current account with the lender, or you have a very large deposit.

To get a more accurate maximum mortgage figure, apply for an agreement in principle (AIP). An AIP is not the same as a formal mortgage offer. It is a theoretical figure of what a lender may be willing to lend you.

Most estate agents will not take an offer seriously without an AIP. You can secure one quickly online or via a mortgage broker.

How much mortgage can I afford?

How much mortgage you can borrow and how much mortgage you can afford are slightly different. Before you borrow the maximum amount, you should think about whether you can afford the monthly repayments on a large mortgage.

A general rule of thumb is that you don't want to spend more than 30% of your take home salary on mortgage repayments. Any more than that and you risk being "house poor" - where you own a house, but lack the money to do other important things (like build up your savings, go on holiday, etc.)

In London, where house prices are very high, it can be hard to keep your repayments under 30% of your income.

Before getting a mortgage, you really should do the maths on what the total cost of home ownership. If your mortgage payments and household bills look like they will take up 40 or 50% of your income, you should consider getting a smaller mortgage.

How much mortgage can I get with bad credit?

If you have bad credit you may still be able to get a mortgage, but it will be harder to find a lender willing to give you a loan.

You will likely need a larger deposit if you have a history of bad credit, and the best mortgage rates won't be available to you.

Generally the best way to find a bad credit mortgage is to talk to a mortgage broker.

How much deposit do I need to get a mortgage?

In most cases, you will need a minimum of a 5% deposit to secure a mortgage, meaning you’ll need a 95% mortgage loan. The size of the loan versus the property value is referred to as loan-to-value ratio, or LTV.

If you are able to save more, for instance a 10, 15 or 20% deposit, you’ll increase your chances of being accepted for cheaper mortgage products. Lower interest rates (and small set-up fees) equal cheaper mortgages.

The cheapest mortgages are generally only available if you have a big deposit, or – if you’re remortgaging or moving house – a large amount of equity in your property.

How much can I borrow with no deposit?

If you have no deposit - otherwise known as 100% LTV - you can still get a mortgage, but your options will be much more limited than if you had a deposit of 5, 10 or 15%.

No-deposit mortgages generally have a much higher interest rate, which means you'll pay a lot more in interest over the long term.

While 100% LTV mortgages are available for first-time buyers, you can find better and cheaper products if you can save up a deposit of at least 10%.

How do lenders assess my affordability?

Most AIPs only require a soft search on your credit file, which means other lenders will not see it. A real mortgage application will leave a mark on your file that all other lenders will be able to see. Generally, having more marks can count against you because it could suggest you are desperate for credit. Being turned down for a loan product will have a negative impact on your credit file.

Mortgage lenders will review your credit file in depth to make absolutely sure you could afford the monthly repayments of the mortgage you’ve applied for. Each lender has their own scoring system – it does not see the score you do, that’s just for you – and may check one or more of your credit files (from Experian, Equifax or TransUnion), so it is vital you check all three before you apply for a mortgage.

Lenders want to know how stable an investment you are by looking at how long you’ve been in a job, lived at your current address and had a bank account.

Income vs. outgoings

On application, mortgage lenders will look at your salary, guaranteed bonuses, pension, investments and any other income you have. You’ll need to prove your income with payslips and bank statements. If you are self-employed, there are some additional hoops to jump through (see below for more details).

Lenders will also closely examine your outgoings. More than just your rent (or current mortgage repayments if you’re remortgaging), which is likely your biggest monthly expense, they’ll look at other regular bills (credit cards, mobile phone, broadband, utilities) as well as your living expenses.

If you are down to £0 the day before pay day, or worse still, you’re in your overdraft, and your bank statements show you eat at restaurants four times a week, you could find it very hard to get a mortgage as it will look like you cannot manage your money.

For that reason, it’s worth trying to get your finances in order at least six months before you apply for a mortgage.

“Stress testing”

You might be able to afford the monthly payments if you secure a mortgage with a low interest rate, but what would happen if rates increased to 3% above the lender’s standard variable rate (SVR)? The average SVR today is 5.11% – so you would be stress-tested on an interest rate of around 8%. This is known as “stress testing”.

Could you afford the repayments should your personal circumstances change? That is not just what a lender considers, but something you will need to ask yourself too.

Having enough savings to cover three months of mortgage payments could really be worth your while in case your circumstances change – for instance, if you lose your current job.

Lenders may limit the amount you can borrow based on their findings.

Should I borrow the maximum amount?

It can be tempting to borrow your maximum mortgage amount and buy the most expensive property you can afford – but that may not be the right thing to do as it leaves you little wiggle room if rates go up or your income goes down…or both!

To begin with, one of the easiest ways to lower your monthly repayments is to borrow less money, giving you a lower LTV. If you have £20,000 as a deposit, that’s only 5% of a £400,000 property, but 10% of a cheaper £200,000 property.

The other thing to consider is that mortgage products are usually arranged in a tiered fashion, with a lower interest rate offered every time your LTV goes down by 5%. So, 95% LTV mortgages generally have higher interest rates than 90% LTV mortgages, which have higher rates than 85% LTV mortgages and so on.

If you’re looking at buying a property and your LTV would be 87%, you might consider raising a slightly larger deposit to push yourself over the 85% LTV threshold, otherwise you’d be stuck at 90%. Likewise, it might be worth looking at a slightly cheaper property, where the same size deposit would provide a better LTV and allow you to keep some money aside.

Borrowing the maximum amount possible could leave you “house poor” – where you own a house, but you have no funds left to pay for everyday stuff without going into debt.

How can I drop my LTV band if I’m remortgaging?

If you’re remortgaging your home, the exact same rule of thumb applies – you want to aim for the lowest LTV possible – but instead of raising a big deposit you get to use the equity in your home.

For example: you raised a deposit of £40,000 and borrowed £360,000 to buy a home valued at £400,000 (an LTV of 90%). Now the five-year fixed-rate deal deal has ended, you want to remortgage to a new fixed-rate mortgage. You’ve since paid off £40,000 from the principal debt – so you owe the lender £320,000 – and your home has gone up in value to £420,000.

Assuming you want to get a new mortgage for the same amount – £320,000, with £100,000 in equity – you would have an LTV of just 76%.

However, a 76% LTV mortgage will most likely have the same rates as an 80% LTV mortgage. To drop to a 75% LTV (and therefore lower the interest rates) you would need to add £5,000. Alternatively, you could try and get a slightly higher valuation for your home, which would help you drop to a 75% LTV.

If you’re remortgaging to unlock money for home improvements or other expenses, try to keep your LTV tier in mind. If you can stay within a lower LTV tier, perhaps by borrowing slightly less, you’ll save a lot more in interest repayments in the long-term.

How much mortgage can I get if I’m self-employed?

First things first, you can still get a mortgage if you are self-employed, you’ll just have a few more hoops to jump through than if you were a full-time employee.

Lenders will consider you more of a risk, so you will need to gather together at least two complete tax-years of business accounts and tax returns. Some lenders require that the documentation has been signed by a chartered accountant to prove that the information you’ve provided is reliable.

Your maximum mortgage will then be based on your net profit, not total turnover. The exact calculation will vary from lender to lender, and also on your legal status – self-employed is different from the sole director of a limited company, for example.

Some lenders may base your maximum mortgage on your past trading history, while others might want projections of future customers and income. Organise both, just in case.

If you’re self-employed, speaking to a mortgage broker is pretty much a must. They will know which lenders will most likely accept you, therefore cut the chance of a credit score-damaging rejection.

Edited by: Sarah Guershon. Mortgage calculator updated to version 1.11 on July 25, 2019.

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Last updated: 2 August, 2019

Should I use a mortgage broker, or go direct?

If you’re looking for a mortgage, you might be wondering whether or not you should talk to a mortgage broker or go directly to the lender.

These days, brokers do more than simply churn out a list of available mortgages for a hefty fee, so it could be worth your while to see what they can offer.

Why should I use a mortgage broker?

Legislative changes, most notably in the Mortgage Market Review in 2014, have resulted in a tightening of the rules with regards to mortgage “affordability” checks, the qualifications of all mortgage brokers, and the information brokers must provide to borrowers about their services and their fees.

Since the changes, both lenders and brokers must consider your financial situation and assess your affordability when suggesting suitable mortgages for you. Moreover, they must be able to prove they have done this.

Whilst this legislative revolution has made it harder to obtain a mortgage, it’s also made it far safer to use a mortgage broker.

You can now trust they will undertake a full comprehensive financial assessment and therefore only give you a range of mortgages you will almost certainly be eligible for.

With the huge expense of buying your first home or moving house, it may be tempting to consider the ‘cheaper’ option of applying for a mortgage with your own bank, or by going direct to another lender for your mortgage.

However, avoiding paying broker fees (though there are plenty of reputable fee-free brokers out there) to save a few pennies now could could cost you thousands over the next few years if you opted for a bad mortgage.

Even if you think you do not need the advice of a broker and know enough about the mortgage market without one, you may be missing a trick.

Some brokers have access to a larger range of mortgages (such as via exclusive deals with lenders) and can help speed up the application process by getting you fully prepared and steering you towards mortgages you will most likely be accepted for.

Can I get a mortgage directly from a lender?

If you have done your research and found your perfect mortgage, are confident that you have found the best deal, or you simply want the convenience of asking your current bank for a mortgage, then that’s your prerogative.

Indeed, there can be some merits to going directly to a lender for your mortgage…just be aware of the pitfalls too:

Pros

• Some banks offer preferential mortgage rates if you already have a current or savings account with them.
• Some lenders have exclusive ‘direct only’ deals that a broker would not have access to.
• You avoid paying broker fees.

Cons

• The advice you get from lenders will only refer to their own products rather than an unbiased view of the market as a whole.
• You will not gain access to any broker-only deals, even if they’re offered by your chosen lender.

How do I get a mortgage through a broker?

If you are planning to employ the services of a broker, do your homework first: ask friends and family for a recommendation, check the internet for reviews, and suss out their fee structure.

Ask them outright how many lenders they work with – the more lenders, the more options you have at your disposal and the more likely you could be to get a good deal.

Generally, there are three types of broker:

• Tied brokers: These are usually recommended to you by a particular mortgage lender and only offer deals from that one mortgage provider.
• Multi-tied brokers: These offer a limited range of mortgages from a panel of mortgage lenders.
• Independent brokers: Also known as ‘whole of market brokers’, these investigate the entire mortgage market to find the best product for you. However, “whole of market” does not cover every single deal, as the name suggests.
  This is because some lenders, like First Direct, do not work with brokers and only offer mortgages to borrowers directly.

Since the legislative changes, mortgage brokers have to state from the outset exactly what range of mortgages they can offer. For the most wide-ranging advice and products, it is always advisable to choose an independent broker that offers a ‘whole of market’ service.

Pros

• A broker’s advice will be tailored to your individual financial situation and needs and can therefore advise you on your suitability to all products.
• Can gain access to the whole of the mortgage market, meaning that they have a greater chance of finding that perfect mortgage for you.
• Have access to ‘broker only’ deals
• Do the searching for you and liaise with your chosen lender, which can save you huge amounts of time and stress.
• Expert in their field so could help you find the very latest deals and have in-depth knowledge of the habits and anomalies of different lenders.
  For example, if you are time-strapped, they may be able to tell you which lenders work quickest or if affordability is your main concern, brokers may know which lenders take certain expenditures into consideration during your affordability assessment (including school fees, childcare costs, commuting costs, pension contributions).

Cons

• Mortgage brokering is a business, and brokers may charge a fee for their services. This can be in the form of an hourly rate, a flat fee, a commission-based fee paid by the lender, or a combination of all three.
  Whichever way they charge, brokers are obliged to outline all fees in an initial disclosure document. If your broker is charging a fee and is paid a commission by the lender, it’s worth asking if they will offset some of their commission against the cost of your deal (you never know!)
• You may miss out on direct-only deals which could be cheaper than those offered via a broker. That said, a good broker may include these offers in any market assessment, but you will have to make the application directly.

When deciding on whether or not to use a mortgage broker, a balanced approach may be the best solution.

Do your own research online first, ask your current bank and other direct-only lenders what deals they have available and then speak to a reputable mortgage broker to see what else is available and suitable for your personal circumstances.

That way you’ll get the holistic advice and information you need in order to get the very best mortgage for you.

Edited by: Sarah Guershon

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Last updated: 8 May, 2019

The most affordable places to live in the UK

Ten years after the global financial crisis, its impact is still being felt in parts of the UK where house prices have declined or only slightly increased since 2008.

Combined with wage growth across the UK, it’s now relatively easy to get on the property ladder in these cheaper areas. But in other parts of the country – particularly in London and the South East where house prices have risen dramatically since 2008 – property remains out of reach.

The affordability of property is closely linked to your earnings: your max mortgage with most lenders will be around 4 to 5x your salary, and they will also “stress test” your finances to ensure you can still keep up repayments if your mortgage’s interest rate goes up.

Now we’ll take a look at the most affordable places to live across the UK. We’ll analyse how house prices and wages have recovered (or not) across the UK, which areas are unaffordable for most people, which regions have become more affordable – and what this all means for you and getting a mortgage.

House prices in UK cities

The Hometrack City Index shows us what has happened to house prices in all major UK cities. There are large differences across the UK which makes buying a home more or less affordable depending on where you live and work (or where you _want _to live and work).

Overall, at the end of August 2018, annual house price inflation in the 20 major UK cities was running at 3.9%, ranging from a 7.5% increase in Liverpool to a 3.7% drop in Aberdeen.

Aberdeen is one of only three cities showing a drop. Prices have fallen for each of the last three years, illustrating the impact local economic shocks can have. Aberdeen is reliant on the oil industry which was severely hit at the end of 2014 when the price of a barrel of oil was halved.

The other two cities where house prices have fallen in the last year are Cambridge, down by 0.1% and London by 0.3%. Both previously saw some of the biggest price increases of the last 10 years and have the biggest income-to-house-price ratios in the UK.

The overall increase in the Hometrack City Index is fuelled by big increases in historically cheaper cities, such as Liverpool, Glasgow, Manchester and Leicester which are now becoming less affordable.

However, the average house price in Liverpool at £120,100 is still 4% below 2007 levels. Similarly, recent increases in Glasgow have only lifted prices to £124,400, where they were in 2007. Prices in Newcastle are also 2% below 2007 levels.

House prices in UK regions

The Office for National Statistics (ONS) collects house price data for each of the UK regions and we can compare August 2008 with August 2018 to see the changes.

RegionDatePriceDatePriceChangeEnglandAug 2008£181,494Aug 2018£249,74837.61%Northern IrelandAug 2008£168,075Aug 2018£132,795-20.99%ScotlandAug 2008£137,783Aug 2018£153,30911.27%WalesAug 2008£139,660Aug 2018£162,37416.26%East MidlandsAug 2008£146,193Aug 2018£194,71833.19%East of EnglandAug 2008£193,182Aug 2018£292,10751.21%LondonAug 2008£281,721Aug 2018£486,30472.62%North EastAug 2008£131,545Aug 2018£133,5381.51%North WestAug 2008£142,259Aug 2018£163,48714.92%South EastAug 2008£220,523Aug 2018£329,26449.31%South WestAug 2008£194,289Aug 2018£257,65932.62%West MidlandsAug 2008£153,811Aug 2018£199,00029.38%Yorks & HumberAug 2008£141,353Aug 2018£163,96415.99%

Source: Office for National Statistics

August 2008 is before the height of the financial crash, but after its initial impact and after house prices had already fallen sharply from the peak of summer 2007. The BBC has a useful tool that can show you how house prices in a specific postcode have changed between 2007 and 2017.

The data illustrates the variation in the recovery of house prices across the UK. In Northern Ireland, prices are still well below August 2008 levels. In the north-east they’ve barely risen. Wales, Scotland and other parts of northern England have seen modest increases, and the Midlands has experienced a sizeable bump. The south and east of England have seen some massive price increases over the last 10 years, with London leading the way.

Disposable incomes across the UK

Here’s the ONS data for the average disposable income per person in a number of UK local authorities, from 2006 to 2016.

Region/TownYearGross disposable incomeYearGross disposable incomeChangeNE – Middlesbrough2006£11,7242016£14,96827.67%NE – Gateshead2006£11,8892016£15,11227.11%NW – Manchester2006£10,3852016£13,18426.95%NW – Lancaster2006£13,1012016£16,85028.62%Yorks – Harrogate2006£16,8602016£21,29226.29%Yorks – Doncaster2006£12,1532016£15,59528.32%EM – Derby2006£12,1562016£15,07824.04%EM – Lincoln2006£14,1622016£18,24728.84%WM – Stoke-on-Trent2006£10,8562016£14,07529.65%WM – Worcester2006£16,1232016£20,61827.88%EE – Colchester2006£14,8132016£19,52631.82%EE – Norwich2006£13,2542016£18,45939.27%London – Kensington2006£40,9212016£62,60052.98%London – Newham2006£13,2732016£18,53739.66%SE – Brighton & Hove2006£16,3272016£20,50825.61%SE – Southampton2006£12,1772016£14,79721.52%SW – Mid-Devon2006£14,6812016£18,67427.20%SW – Swindon2006£15,1022016£18,53622.74%Wales – Wrexham2006£13,2892016£17,01928.07%Wales – Swansea2006£12,5462016£14,91118.85%Scotland – Aberdeenshire2006£15,9592016£20,68129.59%Scotland – East Lothian2006£15,2372016£20,24132.84%NI – Ards & N Down2006£13,5982016£17,03525.28%NI – Mid Ulster2006£12,2792016£14,64719.28%

Source: Office for National Statistics

These numbers look pretty good – until you realise that they don’t include inflation, which has reduced the value of £1 by 32.8% between 2006 and 2016. This means that in almost every part of the UK – except for parts of London – disposable income has decreased over the past decade. Many households are actually poorer than they were in 2006, thanks to slow wage growth over the last decade and a high inflation rate between 2009 and 2013.

When it comes to house affordability, disposable income factors into the “stress test” that lenders will perform when assessing how much you can borrow to buy a home. Lenders must ensure that you can still afford your mortgage repayments if interest rates go up.

Wage increases across the UK

To match house price inflation (or deflation) you need your wages to go up by the same amount over the same period. That’s unlikely for a number of reasons – mainly because for most of us, wage increases are rarely pegged to inflation. Millions of public sector workers have had wages frozen or increased by less than inflation for several years between 2008 and 2018.

Data from the ONS shows that in general, earnings have risen by more in regions that have seen the biggest rise in house prices, but there are wide variations within each region, often linked to the type of businesses that set up in the area, property supply and demand and many other reasons. Regions that have lower wages are usually industrial areas with lower-paying jobs. Higher-paid professions are usually concentrated in cities, not rural areas, which is why in any single region there are big differences between average earnings in cities and rural areas, even those very close to each other.

The most affordable places to live in the UK

House price affordability has increased for those living and working in Northern Ireland and the north east of England. Many of these areas have experienced wage increases of around 30% while house prices have fallen or remained the same, suggesting that it’s now more affordable to buy a property there. Similarly, salary rises are generally higher between 2008 and 2018 than house price increases in Wales and Scotland, suggesting it’s a bit more affordable there.

However, house price increases outweigh salary rises in parts of the south east, where it’s become less affordable to buy a property.

London varies considerably both in the salaries and house prices in each area and the rate that each has gone up by. For all regions of London, any improvement gained from wage increases being higher than house price increases is mitigated by extremely high house prices that are simply unattainable unless you have a very high household income (£100,000+).

Now read our guide on how to get your first mortgage

How do regional changes affect mortgage affordability?

The obvious answer if you’re looking for somewhere to buy a home that’s more affordable is to have a relatively well-paid job and be close to a city for commuting purposes, but buy a home in a more rural area where house prices haven’t risen as fast. You then benefit from higher salaries and lower house price inflation.

Southend in Essex is a good example. The ONS survey of annual earnings puts Southend at the bottom, one of only two southern towns in the bottom ten. At £413 a week, average pay is just over half that of London, which is why many residents commute to London which pushes up the average pay for a Southend resident by £144 per week to £557. By contrast, average house prices are just over £300,000, according to Zoopla – much more affordable than all parts of London on a London salary, even adding in commuting costs, but still too expensive for a typical Southend salary.

It’s not always that simple, because commuting costs and other local factors affect house prices, and you’ll usually pay a premium for commuter-friendly properties.

But other areas, mainly in the north of England and Northern Ireland, have low salaries and also have low house prices, which makes getting a mortgage easier.

For instance in Southend, the average annual salary is £21,476. If a lender were to lend 4.5 times annual salary, that’s £96,642, way below what’s needed to get a mortgage on a £300,000 house. If you then look at Huddersfield, with the second lowest annual salary of £22,048, compared to local house prices of around £175,000, you can see mortgages are much more affordable in Huddersfield than Southend.

So, there are big variations in house price affordability across the UK and many local factors affect both house prices and wage levels.

But, there are ways of bridging the gap by buying in a more affordable area and working in an area with better paid jobs.

Did you find this useful?

Last updated: 9 May, 2019

Playing Your Cards Right: Avoiding the debt zombie apocalypse

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Households with credit card debt are spending more than households without credit card debt in seven of the nine discretionary spending categories that our sister site, CreditCards.com recently asked about. This is a really big problem because the average credit card charges a record-high 17.86 percent. If you have credit card debt, you’re essentially spending 18 percent more for everything you buy.

I want to highlight that these are discretionary purchases – not housing and groceries. And they’re big line items, which is important because I’m not into the whole latte-shaming thing. If you’re in debt, it’s probably not because of small luxuries. A $425 monthly car payment is much more likely to be the culprit. That’s about $5,100 a year.

Or if it’s not the car payment, maybe it’s leisure travel or dining out. The average household with credit card debt that spends on leisure travel runs up an annual bill of $2,211, and dining/takeout is close behind ($2,186).

There’s also clothing/shoes/accessories ($1,892), cell phone services/upgrades ($1,629), out-of-home entertainment ($1,538), fitness ($1,385), subscription services ($1,198) and personal care/beauty ($1,146).

Remember, these expenditures are optional! Even the car payment. You might need a car to get to work and elsewhere, but you don’t need a brand-new car. The average new car costs $37,577, according to Kelley Blue Book. On average, $31,099 of that is financed, Experian reports, for 69 months. That’s almost six years of $500+ monthly payments and a big reason why so many households are in debt.

Buying a cheaper used car or holding onto your existing car a bit longer would save a ton of money. You could also opt for public transportation or ridesharing services such as Uber and Lyft. And note, these car payment figures I’m quoting are just for the loan. They don’t even include insurance, gas and maintenance, which would conservatively add a few thousand dollars to the annual total.

Lifestyle creep is to blame

A different CreditCards.com survey found that, among those with credit card debt, 56 percent have been in debt for at least a year and 37 percent have been in debt for at least two years. More than a third of credit card debtors blamed emergency expenses for landing them in debt, and 28 percent pointed to day-to-day costs. However, many people are blurring the line between necessary and discretionary.

In all nine categories, the CreditCards.com data found fewer than half of respondents would be willing to significantly trim their spending in order to save money. Yikes!

I don’t mean to sound like you can’t have any fun. I just think there are plenty of ways to have fun that don’t end up costing you an arm and a leg. The Federal Reserve says the average household with credit card debt owes $5,700. If you only make minimum payments at 17.86 percent, you’ll be in debt for 19 ½ years and you’ll end up paying $7,526 in interest. That’s a recipe for financial disaster. How can you save for retirement, college tuitions and other priorities if you’re living like that?

The median household credit card debt is $2,300. It could potentially be retired in one year if the family opted for a staycation rather than a big trip. Even cutting your annual dining out bill in half would make a huge dent. So, turn a restaurant visit into a special treat rather than a weekly (or in some cases, daily) habit. Pro tip: bring your lunch to work for one week and see how much money you save.

Other ways to get out of credit card debt

Besides raising your income (through a side hustle, perhaps) and cutting your expenses, take advantage of balance transfer credit cards. These allow you to move a high-rate credit card balance to a new card with a 0 percent interest rate for up to 21 months.

Refrain from making new purchases on this card. Divide how much you owe by the number of months in your no-interest promotion and stick to that monthly payment schedule. You’ll knock out the average $5,700 debt with 21 payments of $271 and change. Beware of transfer fees – that 21-month offer (the Citi Simplicity® Card) charges a 5 percent transfer fee. Most balance transfer cards charge a transfer fee ranging from 3 to 5 percent.

The longest 0 percent period without a transfer fee is 15 months (available on the Chase Slate, the BankAmericard® credit card and the Amex EveryDay® Credit Card from American Express). In all three instances, you need to transfer the balance within 60 days of opening the account to get the transfer fee waived.

I’m confident that everyone can get out of credit card debt – usually in no more than a year or two – if they sign up for a balance transfer card and make lifestyle modifications such as earning more or spending less.

More from Ted:

Ted Rossman is the industry analyst and columnist at Bankrate.com and CreditCards.com. He has been interviewed by hundreds of media outlets, including the Wall Street Journal, Forbes, NBC Nightly News, CBS News, CNBC and Fox Business. Ted also writes the “Wealth and Wants” column for CreditCards.com, which focuses on cash back cards. He previously spent seven years as a member of the award-winning communications department at CreditCards.com and its sister sites, The Points Guy and Bankrate.

In Equifax Settlement Over 2017 Data Breach, Consumers Unlikely To See Full Cash Payout

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The Federal Trade Commission recently announced its settlement with Equifax following the credit bureau’s 2017 security breach that affected 147 million American consumers.

As part of the settlement, up to $425 million was designated to help people affected by the breach. Originally, consumers who were affected could file a claim to receive either a $125 payout or a decade of free credit monitoring.

After “overwhelming” public response, however, it’s now unlikely that any claimants will receive a payout equal to the amount originally stated.

“A large number of claims for cash instead of credit monitoring means only one thing: each person who takes the money option will wind up only getting a small amount of money,” said Robert Schoshinski, assistant director of the division of privacy and identity protection, in a blog post on the FTC website Wednesday. “Nowhere near the $125 they could have gotten if there hadn’t been such an enormous number of claims filed.”

The details

According to the FTC, though the settlement designated at least $300 million and up to $425 million to help consumers, just $31 million of that was set aside for the cash payout option.

In the original notice, consumers were given the option to choose between up to 10 years of free credit monitoring services or, for those who already have credit monitoring services, a $125 cash payment.

Those affected may also be able to claim compensation for time spent dealing with the breach ($25 per hour up to 20 hours) and for any identity theft that can be traced to the breach (up to $20,000), making up the rest of the designated funds.

Should you file a claim?

If you were one of the 147 million people affected and have not filed your claim with the FTC, it’s still worth taking the time to do so, says Ted Rossman, industry analyst at Bankrate.

You can determine your eligibility here and file your claim here.

The FTC is encouraging those who haven’t yet filed a claim to opt for the credit monitoring option. However, there are plenty of free credit monitoring services out there that you can take advantage of, including from Bankrate, which means claiming the cash payout from Equifax is likely still the better option for many consumers. You can ensure your credit is safe and receive the payout as an added bonus, even if it’s unlikely to be any amount near $125.

But your precautionary measures shouldn’t end there. Especially as major data breaches continue to affect millions of customers of popular brands like Marriott and, most recently, Capital One, it’s more important than ever to ensure your information is protected.

“Credit monitoring and checking your credit reports and bank/credit card statements are good, but are supplements,” Rossman says. “These will just tell you there was a problem, rather than preventing it from happening in the first place.”

Next steps

“My top tip is to freeze your credit,” Rossman says. “That’s the best way to prevent criminals from opening unauthorized accounts in your name. It’s free, quick and easy. Contact Equifax, Experian and TransUnion to do this. I froze my credit with all three bureaus online in less than 10 minutes total.”

In addition to credit freezes and monitoring systems, take it upon yourself to review your credit card and bank statements as well as your credit reports regularly to ensure nothing is awry. Nobody knows your financial situation better than you, and you can be the first line of defense against any fraudulent accounts or spending that occurs in your name.

It’s also important to develop strong alphanumeric passwords, don’t repeat passwords and update passwords on all accounts regularly.

Rossman cites a recent CreditCards.com survey that found more than 80 percent of adults are guilty of reusing passwords and most internet users who do reuse passwords use the same password at least half (61 percent) or all (22 percent) of the time.

“If you find it hard to remember all of your different logins, use a password aggregator such as LastPass to do it for you,” he says. “They’ll create secure, unique passwords for all of the sites you visit and you only have to remember one master password.”

And though there isn’t much you can do to prevent massive data breaches from occurring, you can help prevent fraud at an individual level by staying aware of the ways in which you may be putting your data at risk.

“That CreditCards.com survey found about half of Americans had done sensitive business over public Wi-Fi over the past year, about a third carry their Social Security Card on a daily basis and 28 percent throw out sensitive mail without shredding,” Rossman says. “Don’t commit these data security sins.”