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 locked into a product with trade-in penalties then hunting for a new product may cost you more than it would save you. But if your existing product is approaching the end of the penalty term, or has ended any tie in periods, then it could be worth trying to compare mortage loan rates to check if there is a more efficient product out there on the market.
There is also, alas, a further group of people for whom hunting a remortgage rate may not be an effortless or a cheap opportunity. If you are unlucky enough to have bought your property within the last couple of years, then with the dropping home 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 height of the property prices, it is expected that you have lost quite a big chunk of what you paid for the dwelling.
The difficulty here is that you might find that your existing 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 home and it has now dropped in value by 10%, although the amount on loan would be the same, the amount as a percentage of the house value has shot up to 100%. Many banks are now dubious 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 current 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 strenuous situation. Until of late 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 house value has risen by more or less 40% or more, you would still be looking to have a loan of more than 90%. This would have the result that a lot of lenders unlikely to be prepared to help you.
If you are stuck with an pricey mortgage and want to move to a cheaper one, then the mortgage market can be a mine field. Make certain that you speak to a mortgage advisor and let them compare mortgage rates for you, to see if they can uncover some good mortgages for you.
Keith Lunt writes for the comparemortgagerates.co.uk website, where you can discover practical information about interest rates and make contact with a local broker who may be able to aid you in hunting a new remortgage product.
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