21st Mar 2017
Later life borrowing
By Ashley Shepherd
This is arguably one of the most commonly-asked questions in the UK.
It’s particularly pertinent for people looking to take stock of their overall financial position at certain stages of their life. Examples might include prior to a marriage, when children are born, when the kids finally leave the nest and you’re ready to downsize or if you’re facing retirement etc.
Although this is a commonly-asked question, it’s only one of several in the domain. So, let’s examine it on the basis of frequently asked questions – and answers!
Is it possible to state an objective price for my house?
In short, ‘no’.
There are typically three different commercial views as to the value of your house:
- yours – which may be influenced by many factors including things such as your sentimental attachment to it, how much you’ve improved it over time or how much debt you have secured on it. If you’re looking for equity release, that will be another factor that might influence your ideas;
- a potential buyer’s – typically most buyers will seek to place as low as possible an estimation on the value of the property for obvious commercial reasons. They may use many justifications and incentives (e.g. “we’re cash buyers”) to push their valuation;
- a professional’s market valuation. This usually comes from a professional valuation expert and is designed to support say a mortgage application and loan-to-value assessment from a potential lender. Typically, this valuation will be very conservative and based upon a “price for a quick sale” assessment.
The three valuations can often be close but also may be miles apart and resolvable only through negotiation.
Is there any firm foundation for house prices?
Yes. If you want to sell a house, it’s often sensible to start to frame your expectations by looking at:
A word of caution – remember that what people are advertising their properties at and what they’re getting, may be very different things. There’s a degree of truth in the old saying that your property is only worth what buyers are prepared to pay at the time you want to sell.
Can I add value by decorating prior to sale?
This is a very tricky question!
Most estate agents would probably advise that redecorating your property before sale will certainly help it to sell more quickly. It might, in some cases, add a relatively small amount to your asking price.
Typically though, it won’t make a huge difference to your property’s value.
This is quite different though to the subject of structural enhancements. For example, a loft conversion can add a lot of value (but take advice) when you’re trying to sell a house.
How can I sell my house?
There are the traditional routes of private sales and Estate Agents. Both have their pros and cons.
There is a new breed of Estate Agent though who operate on a very different basis. They don’t, in some cases, take a commission but work on a fixed fee. Their marketing style is also very different.
Examples include:
Is equity release an alternative to selling?
A lot depends upon why you want to sell your house.
If you’re trying to sell because it’s now too big with your family off your hands, then this route won’t be of much interest to you.
On the other hand, if you want to sell your house largely or even exclusively to raise capital, then equity release may be a very viable option.
If you have lived in your property a long time you might be surprised how much its worth, so if you are over 55 and thinking of raising some cash, you may wish to consider releasing equity.
It works simply. Broadly speaking, you effectively draw down or more correctly release, as a lump sum in cash, some of the equity (the difference between a realistic valuation of your house and the amount of any debt, such as your mortgage, you have secured against it).
Equity release isn’t necessarily suitable for everyone. There are also a number of different ways you can do it. It may though be an option worth considering. Read our equity release section of the website for more information.
How can I sell my property quickly?
There is no guaranteed sure-fire way of doing so. A few useful tips that apply in most situations though include:
- get a professional (e.g. an estate agent) to look at your property and to comment on anything that might hold it back;
- take recommendations on competitive pricing based upon a ‘fast sale’ orientation;
Over-optimistic pricing is often one of the biggest single factors in delaying a sale – so try to avoid that if at all possible.
Thinking of releasing equity?
Could be an alternative to moving home