In today’s economical environment, it is becoming harder and harder to take that giant leap onto the property ladder. The deposit needed in order to get a mortgage with a decent interest rate has risen to twenty percent which is proving difficult, if not impossible, for the average British person to obtain. The average cost of a house in the UK is £232,628 (according to the BBC news online, Thurs, 10th March 2011) and who has forty six thousand pounds in invest? Not me, that’s for sure. There are of course the lucky ones who bought their house years ago and are happy to sit tight in it and enjoy being an established home owner for the years to come. I however, come under a different category altogether – I am an ‘inbeweener’…
My husband and I bought our first property, a one bedroom flat, in 2005 for one hundred thousand pounds thinking that we had made a sound investment. By 2009 the value of our flat had decreased to ninety five thousand pounds and I had given birth to our beautiful baby boy – oh dear, did I mention that our flat only had ONE bedroom? With no equity to put down as a deposit for a larger home and no savings, we were stuck for options. Our choices were – sell the flat (coming off that now-impossible ladder which we had worked so hard to climb onto) and rent something bigger, or rent out our flat for a couple of years (meaning we get to stay on the ladder) and rent something bigger. In a few years we hoped we could claw back our equity, sell up and buy a larger house. We, like lots of people in our ‘inbetweener’ situation, chose the latter – it sounded like the perfect plan.
Being the honest citizens that we are, we approached our mortgage lender and asked for ‘permission to let’. They reviewed our situation and granted us this permission for up to three years – perfect. However, a few months down the line, once we had found our ideal tenant, moved into a rented house, had all become quite comfortable with the situation, we got a letter from them telling us that they had released a range of ‘special mortgage products’ especially for their consent to lease customers which we would now be required to switch to if we wanted to carry on renting out our flat. Have a guess what the downfall to this was? Yes, not only was the interest rate way higher than our standard variable one (one hundred and eighty pounds a month higher in fact), but it would cost nearly one thousand pounds to set up! Thank you Halifax. There were no exceptions either: after various letters and phone calls explaining our situation and the fact that we could not afford this new rate so would be forced to sell up, loosing us as customers all together, we were told to pay it, move back in or sell up. We are currently in the process of selling. Adios property ladder.
So how many others out there are ‘inbetweeners’ like us and are being taken for a ride by mortgage lenders who are using the current economic crisis to their advantage and creating ‘special consent to let products’? Isn’t it the banks fault that we are all in this mess in the first place? Maybe in a few years, things will pick up, banks will stop being so greedy, deposits will go down and I will be able to reach that illusive ladder once more. I certainly hope so.