Get house price right or face high mortgage rates, warns Abbey

22 May 2009 / by Rebecca Sargent
UK homeowners are over-pricing their homes by an average of £35,000, research from Abbey mortgages has revealed, but this could mean paying over the odds for the mortgage.

According to the research, average homeowners estimate their home to be worth £190,175, but this is an over-estimate of £37,280 when compared to official Land Registry house price figures.

However, over-valuing a home could mean that a borrower is on a standard variable rate (SVR) mortgage for longer, which, as interest rates are set to increase, could mean paying more for the mortgage.

Commenting, Nici Audhlam-Gardiner, Abbey director of mortgages said: "Homeowners looking to remortgage or sell their homes in the near future need to make sure that the value of their home is accurate and has been valued by professionals to avoid problems or disappointment further down the line.

"As house prices continue to fall, the longer a customer delays on SVR, the more they risk that the good rates are out of reach to them due to fall in value of their home and the increase in loan-to-value."

As the mortgage market changes, lenders have re-entered the first time buyer mortgage market, and Abbey mortgages is launching a four year fixed rate first time buyer mortgage with an LTV of 85 per cent and an interest rate of 5.74 per cent, in addition to a new range of low fixed rate mortgages.

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