Can we upsize to take advantage of bigger house price discounts?

Mouthy Money Your Questions Answered panellist, Jeremy Leaf, answers a reader’s question on buying a bigger house to take advantage of falling prices.

Q. House prices are falling and while we own our home with a mortgage, we’d like to move up the ladder in the next two years to have more space for our growing family. Even though our house price is likely down, is it possible to upsize to take advantage of bigger discounts further up the ladder? 

A. It is certainly worth investigating to find out whether it’s a good time to move with regards to the type of property you are looking for in your area.  

We are finding that some buyers are taking advantage of the vulnerability of some sellers to purchase at what they believe to be more realistic prices, depending of course on personal circumstances and mortgage exposure.  

If you have been able to build up a good amount of equity in your home, this will help you to take advantage of any opportunity that comes available.  

However, even if not it is certainly worth making enquiries to ensure that you are ready to act quickly if an opportunity to move does arise, particularly in the summer months when competition is generally less fierce as so many people are on holiday. 

It is always best in these circumstances to concentrate on the difference between the selling price on your property and what you might be paying for another one, rather than focus on achieving a certain amount for your own home.  

You must also take into account the fact that interest rates may go up a little further before they begin to level off or even the most recent gains begin to be reversed.  

If you are on a fixed-rate mortgage, check whether you have to pay early redemption penalties for getting out of the mortgage ahead of the end of the fixed period if you can’t port it to a new property. If there are hefty charges to pay, it may be worth waiting until this is no longer the case or any discount you get on your property purchase may be wiped out. 

It is all very well for lenders to have their stress tests but we are finding a lot of buyers have their own stress tests – what they consider manageable, not just in terms of mortgage repayments but also in terms of their other expenditure or lifestyle. It’s worth asking yourself if you can afford a bigger mortgage on a more expensive house, for example. 

Therefore, overall it’s definitely worth investigating but go in with your eyes open and research carefully before making a decision. It may take time to find the right property but it is certainly worth considering as this could be the best opportunity for a while to move up the ladder. 

Jeremy has been principal of Jeremy Leaf & Co Chartered Surveyors and Estate Agents, in Finchley, north London since March 1984. The business has grown organically to employ 22 people today and, although still run as a general practice covering sales, lettings, surveys, valuations, etc, it has become particularly synonymous with land and new homes. As a result, the business has been directly involved in the acquisition and sale of over 200 schemes in London and the Home Counties. Jeremy is also a former residential chairman of the Royal Institution of Chartered Surveyors. 

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