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 immensely upon your own individual financial circumstances. If you are locked into a product with redemption penalties then searching for a new product might cost you further than it would save you. But if your current product is approaching the end of the penalty term, or has ended any tie in periods, then it might be worth trying to compare today’s mortage rates to check if there is a more economical product out there on the market.
There is also, unfortunately, another collection of people for whom searching a remortgage rate might not be an simple or a inexpensive choice. If you are unlucky enough to have bought your house within the last few years, then with the tumbling house prices currently seen in the market, it’s feasible that at best your property is worth only what it was worth when you bought it. At worst, for those that bought at the peak of the property prices, it is expected that you have lost quite a sizeable portion of what you paid for the dwelling.
The difficulty here is that you might find that your current deal borrowing is too high for the banks to be happy to lend to you. For example, if they were happy to lend you 90% of the value when you bought the dwelling and it has now dropped in value by 10%, though the amount borrowed would be the same, the amount as a percentage of the house value has shot up to 100%. Many banks are now uncertain about such high lendings, in countless cases punishing those who are borrowing above 75%. So even though your borrowing might have seemed OK to the banks when you took out your existing deal, now they might not touch you with the proverbial barge pole.
And it’s not merely those that have suffered house price drops that are in this thorny situation. Until recently some lenders would in fact lend up to 125% of the home’s market worth. If you were in this arrangement when you took out the mortgage, unless your home value has risen by roughly 40% or more, you would still be searching to have a loan of more than 90%. This would leave a lot of lenders unlikely to be ready to help you.
If you are caught with an costly mortgage and want to move to a cheaper one, then the mortgage market can be a mine field. Check that you get in touch with a mortgage advisor and allow them compare mortgage rates for you, to see if they can locate some good mortgages for you.
Keith Lunt writes for the comparemortgagerates.co.uk website, where you can get valuable information about interest rates and make contact with a local broker who may be able to assist you in searching a new remortgage product.
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