Homeowners must cut costs to pass affordability
According to Equifax research conducted by YouGov nearly a third (32%) of homeowners are prepared to cut back on living expenses including food and energy bills for at least six months to afford their next mortgage.
Over half (56%) are willing to socialise with friends less while just over half (53%) would cut back on retail therapy for at least six months.
Andrew Webb, sales and marketing director of Equifax Personal Solutions, said: “With new housing stock limited, it is vital for homeowners to continue to move up the property ladder in order to free up smaller homes for first-time buyers.
“Many homeowners recognise the importance of cutting back on their lifestyle spending, including holidays and socialising, is promising in terms of managing their future affordability.
“It’s also important because of the new mortgage affordability rules. Homebuyers need to remember that their current financial behaviour will determine the likelihood of them being able to borrow the amount needed for their next home.”
A quarter (26%) would be willing to take on the stress of a new job with a higher wage to secure the finance for their dream home, while 23% said they would borrow the maximum amount available to them.
Webb added: “We suggest anyone planning on making a home move in the next six to 12 months keeps track of their current financial commitments and regularly checks their credit report.
“When applying for a mortgage, credit information will be used to confirm their identity and assess their credit status. It’s important, therefore, that they understand what information is on their credit report.”
The research also outlined how over a third of homeowners believe they will pay off their mortgage later than originally anticipated.
Nearly a quarter (23%) do not expect to pay it off until they are between 61 and 65 years old, while this figure rises to one in three (34%) in Scotland.
One in 10 meanwhile even expects to be between 66 and 70 before they finally pay off their mortgage.
Homeowners in the North (42%) are the least optimistic regarding the age they’ll pay off it off, while Londoners are the most optimistic with just 27% thinking they will be older than expected before they pay off their mortgage.
Homeowners between 35 and 44 expect to pay it off at an earlier age, as over a quarter (26%) expect to be mortgage free between 56 and 60 whereas 30% of 45-54 year olds expect to own their home outright between 61 to 65.