Mortgage completions are crumbling to a low and the bank’s base rate is predicted to hit an all time low. Is this the time to be hunting for a remortgage?
Well, it all is dependent enormously upon your own individual financial state of affairs. If you are locked into a product with trade-in penalties then looking for a new product may cost you more than it would save you. But if your current product is approaching the end of the penalty term, or has finished any lock in periods, then it may be worth attempting to compare all mortage rates to test out if there is a more efficient product out there on the market.
There is also, unluckily, another group of people for whom looking a remortgage rate may not be an uncomplicated or a economical option. If you are unfortunate enough to have bought your house within the last few years, then with the tumbling house prices at this time seen in the market, it’s likely that at best your property is worth only what it was worth when you bought it. At worst, for those that bought at the crest of the property prices, it is likely that you have lost quite a huge portion of what you paid for the home.
The problem here is that you may find that your current deal borrowing is too high for the banks to be pleased to lend to you. For instance, if they were happy to lend you 90% of the value when you bought the home and it has now dropped in value by 10%, though the sum on loan would be the same, the quantity as a fraction of the house value has shot up to 100%. Many banks are now hesitant about such high lendings, in many cases punishing those who are borrowing in excess of 75%. So while your borrowing may have seemed OK to the banks when you took out your present deal, now they may not touch you with the proverbial barge pole.
And it’s not just those that have suffered house price drops that are in this arduous situation. Until recently some lenders would in fact lend up to 125% of the home’s market value. If you were in this situation when you took out the mortgage, unless your home value has risen by roughly 40% or more, you would still be looking to have a loan of more than 90%. This would result in a lot of lenders unlikely to be ready to help you.
If you are trapped with an high-priced mortgage and want to move to a cheaper one, then the mortgage market can be a mine field. Take care that you speak to a mortgage advisor and let them compare mortgage rates for you, to see if they can unearth some good mortgages for you.
Keith Lunt writes for the comparemortgagerates.co.uk website, where you can get helpful information about interest rates and make contact with a local broker who may be able to assist you in looking a new remortgage product.
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