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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 personal financial situation. If you are tied into a product with trade-in penalties then looking for a new product could cost you more than it would save you. But if your existing product is approaching the end of the penalty term, or has completed any tie in periods, then it could be worth attempting to compare best mortage rates to test out if there is a more efficient product out there on the market.
There is also, alas, another collection of people for whom looking a remortgage rate could not be an uncomplicated or a economical option. If you are unfortunate enough to have bought your house within the last couple of years, then with the sinking house prices at present 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 crest of the property prices, it is likely that you have lost quite a hefty portion of what you paid for the home.
The trouble here is that you could find that your existing deal borrowing is too high for the banks to be happy 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 amount borrowed would be the same, the sum as a proportion of the house value has shot up to 100%. Many banks are now dubious about such high lendings, in many cases punishing those who are borrowing in excess of 75%. So although your borrowing could have seemed OK to the banks when you took out your present deal, now they could not touch you with the proverbial barge pole.
And it’s not merely those that have suffered house price drops that are in this complicated position. Until recently some lenders would in fact lend up to 125% of the home’s market worth. If you were in this position when you took out the mortgage, unless your house value has risen by almost 40% or more, you would still be looking to have a loan of more than 90%. This would cause a lot of lenders unlikely to be willing to help you.
If you are trapped with an expensive mortgage and want to move to a cheaper one, then the mortgage market can be a mine field. Take care that you make contact with a mortgage advisor and let them compare mortgage rates for you, to see if they can get hold of some good mortgages for you.
Keith Lunt writes on behalf of the comparemortgagerates.co.uk website, where you can find helpful information about mortgage interest rates and contact a local broker who may be able to aid you in looking a new remortgage product.
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