Going through significant life changes? How to protect your home

protecting home

Life changes can happen at the least expected of times. A well-paid job can result in sudden and unexpected redundancy, for example, while tragic events such as illnesses and bereavements can come from nowhere. Whether you pay your mortgage as part of a couple or you’re the sole bill payer, these sorts of problems can create a real headache – and if you’re not prepared, you can quickly find yourself in a pickle.

Luckily, there are some ways to prevent this sort of problem from causing too much trouble. You can look into insurance options, for example, or you can explore what options downsizing might have. Saving up is another option too. This article will explore how you can protect yourself in the event of some sort of unexpected catastrophe heading your way. 

Insurance options

If you’re not in an immediately problematic position in terms of your mortgage but are merely worried about what a life change in the future could entail, now’s the time to act. Taking out particular types of insurance could help here: critical illness cover is one option and can protect you if you or your spouse is suddenly unwell in a significant way. There are also cover types available specifically for those who want to protect against becoming unemployed. Using a comparison site can help you to get the best deal here – and you might be surprised at how relatively affordable these services can be. 

If you have some savings in the bank, you may be able to use these to protect your property. You may be able to pay off enough of your mortgage to bring down the amount of your mortgage, which in turn can lead to more favourable month by month repayment levels. Again, this is a long term solution – and not one that will be suitable if you’re suddenly faced with the need to make a decision. However, if you’re looking into these options as a way to protect yourself in the future, it could be exactly the move you need to make.

Downsizing

In some cases, the most appropriate option is to release some of the equity in your home – or, conversely, move to somewhere cheaper so that you can reduce the amount you pay out on your mortgage bills. This is an option often explored by those who have some savings, but who have been faced by a sudden problem such as a job loss or change. If you have some breathing space, you can begin to make moves towards moving house to somewhere which reflects your new long-term circumstances. It’s also an option often explored by those who don’t have a buffer of savings or insurance too.

Often, the main stumbling block to this being realised is the fact that market movements don’t always go in your favour. You may, for example, be in a location and place in which homes are simply not selling for one reason or another, or maybe you are only receiving very low offers whenever you list it on the market. In this scenario, speaking to a cash buyer could help. They are often able to buy properties very quickly, and not always for a necessarily large amount less than the market price. At the very least, it’s worth looking into – especially if time is of the essence and you’re concerned about what the immediate future might hold. 

Tweaking your mortgage

It’s a surprisingly little-known fact that the amount you are currently paying on your mortgage is not set in stone. There are several options available to you which can provide some relief if you’re feeling the pinch due to life changes – and they’re all worth exploring. 

One option available to you is to increase the term of the mortgage. Say you’re currently on a 25-year term: if the mortgage company is happy to extend it to 30 or even 35 or 40 years, you can reduce the amount you pay per month significantly. This does have a long-term downside, which is that you will of course be paying outgoings for longer over the course of your life, and you will be borrowing for longer – which means you’ll pay out more in interest. However, in theory, you can always choose to change the term back when it suits you, and it could in some cases save you a couple of hundred pounds which can enable you to keep your head above water for a little while longer. 

Alternatively, why not see if you’re able to remortgage? This could be an attractive option, especially if you’ve owned your property for a long time and it has risen in value since you bought it. Doing this can save you cash because it requires a revaluation of your property. Say you bought a house for £200,000, and you’ve paid off £100,000. You’ll have a loan of 50% of the value, which will give you decent – but not amazingly low – interest rates. However, if your house has gone up in value to £400,000, you’ll actually have a loan of 75% of the value – and the interest rates available will certainly be lower if the revaluation goes ahead. It may be worth talking to a financial advisor in this scenario, as they can help you to ensure you’re making the decision that is right for your circumstances. 

If you’re experiencing some sort of life change, it may feel scary – especially if the security of your home rides on it. However, there’s no reason to despair. You may well be able to change your circumstances, even if you don’t have insurance or savings. It’s time to do your research and find the option which is most suitable for you.

Do you need to release equity – and fast? If so, National Property Trade may be able to help. Click here to learn more.