info@strattonwm.co.uk

0800 970 8984

Mortgage holders could benefit from rising property prices as an average sale made £74,000 in 2023

April 16, 2024

Rising property prices mean homeowners who sold in 2023 made an average profit of £74,000. Gains could help you move up the property ladder, but they could also be useful even if you don’t move and might lead to lower mortgage repayments. Read on to find out if you could benefit from rising property prices.

Just 1 in 10 homes sold in 2023 made a loss

Despite concerns that property prices would fall or stagnate due to the Bank of England increasing its base interest rate, which affects the cost of borrowing, data indicates that homeowners are benefiting from long-term growth.

Indeed, according to Zoopla, the average homeowner who sold their property in 2023 did so after being in their home for nine years and made a sizeable profit of £74,000. London homeowners saw the biggest gains at £137,000, while those selling a bungalow or detached home made over £100,000 on average.

Only 1 in 10 properties sold in 2023 had fallen in value, with an average loss of £17,000.

So, if you’re searching for a new home this year, you might discover your budget is larger than you expect. Having your property valued now could help you calculate your mortgage needs and the budget for your next home.

Rising property prices could cut your outgoings when you remortgage

You don’t have to wait until you’re ready to sell your home to benefit from rising property prices – if the value of your home has increased it could help you secure a more competitive interest rate on your mortgage.

Lenders will calculate how the value of your home compares to your mortgage, known as the “loan-to-value” (LTV) ratio, when reviewing your application.

If you purchased a home for £200,000 with a 10% deposit, your LTV would be 90%. If the value of your property then increased to £220,000, your LTV would fall to around 82% because your mortgage relative to the value of your home has decreased.

Of course, if you’ve chosen a repayment mortgage, your repayments will also lower your LTV as the amount you owe falls.

Usually, the lower your LTV, the more competitive the interest rate you’ll be offered as you pose less of a risk. So, making mortgage repayments and rising property prices could lead to lower repayments in the future.

Accessing a lower interest rate could save you thousands of pounds over the mortgage term

Over the last few years, the Bank of England has increased its base interest rate to tackle inflation. As of March 2024, the base rate was 5.25%, compared to 0.25% at the start of 2022. As a result, many homeowners have seen their mortgage repayments rise sharply.

Securing a competitive interest rate could help offset some of the previous increases you might have experienced. Even a seemingly small difference in interest rate could have a large effect on your finances, especially when you calculate the savings over the full mortgage term.

Let’s say you have borrowed £150,000 through a repayment mortgage with a 15-year term, if the interest rate is:

  • 4% your monthly repayment would be £1,109
  • 5% your monthly repayment would be £1,126.

The total interest you’d pay over the 15-year mortgage term with a 4% interest rate is around £20,000 less than you’d pay if the rate was 5.5%.

So, if your mortgage deal has expired or will do so soon, getting your home revalued might be a useful step – it could lead to lower regular outgoings and really add up over the long term.

You can usually lock in a new mortgage deal up to six months before your current mortgage deal expires. Being proactive and finding a new mortgage before your existing one ends could mean you avoid paying your lender’s standard variable rate (SVR), which is often not competitive.

Contact us if you need to apply for a mortgage

Whether you’ll be moving home or need to remortgage your current property, please get in touch. We can assess the mortgage market with your circumstances in mind to help you identify which lenders might be right for you. It could save you money and make the application process smoother.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

What our clients say

The people we help are at the heart of what we do. Here are some of their testimonials.

I would highly recommend Darius and John. I’ve used a financial adviser previously and could never get in contact with them when I needed their help. Stratton Wealth Management have been excellent from the start. They are always available to talk, and they also don’t talk in financial jargon!

Dave Rigby -

A client since 2015

Having recently transferred my financial management to Stratton Wealth Management, I have been extremely impressed with the highly professional service I have received. I feel I have been fully involved in all decision making, and the company's highly skilled advisers have shown commitment and patience in any dealings I have had with them. I have also always found them to be easily accessible for any discussion I may require.

Denise Thornton -

A client since 2019

As a business owner and father of four children, finances are usually the last thing we think about. Stratton oversees and manages our finances, both in terms of advice for my business and our personal investments. It is comforting to know that our retirement, investment and life insurance planning has been taken care of. Darius and John are always so efficient in dealing with our affairs. As someone with no real understanding of the ins and outs, it has been fantastic to have experts giving us great advice and making sure our best interests are always the top priority.

Lee and Claire Parkinson -

Clients since 2016

Darius deals with my family’s finances and is a very trusted adviser. We meet a number of times a year, but I know I can call him any time if I have any questions. He is proactive, helpful and friendly!

Jonathan Dennis -

A client since 2019

I knew I needed to begin saving and planning for the future but didn’t know where to start. Stratton helped me to understand my finances and put together a savings plan that is affordable and works for me. I now have and an ISA and a pension, and whilst retirement is many years away, I have the peace of mind that I am saving for my future. I look forward to working with them for many years to come.

Martin Corrigan -

A client since 2016

I have been impressed with the advice and service provided by Stratton Wealth Management and have always found Darius to be approachable, dependable and highly professional in his approach. It is reassuring to be able to have such a high level of confidence and trust when it comes to financial advice.

Russell Jones -

A client since 2018

Many thanks indeed for your in depth report for my client Mrs H – it is most thorough and above all readable. This might sound particularly strange; however you may well gather that in my profession we see many such reports, and I often feel that if the adviser fills it with charts and graphs it evidences a level of research. In truth most of what is produced is readily obtainable from the internet.

I would like to thank you (and your organisation) for your prompt and professional attention to my requirements on behalf of my client. As a practice we shall definitely be putting Stratton Wealth Management on our “preferred supplier list".

Colin Dunstall, Donaldson Dunstall Solicitors -

A client since 2015