Mortgage acceptance rates are falling to even more whilst the bank’s base rate is predicted to hit an all time low. Is this the right time to be looking for a mortgage?
Well, it all depends very much upon your own personal finances. If you are tied into a mortgage with redemption penalties then looking for a remortgage might cost you more that it would save you. But if your current mortgage deal is approaching the end of the fixed tie in term, or has finished any tie in periods, then it might be worth trying to compare best mortgage rates to see if there is a cheaper option out there on the market.
There is also, sadly, another group of homeowners for whom finding a new mortgage offer might not be an easy or a cheap option. If you are unlucky enough to have bought your house within the last couple of years, then with the falling house prices currently seen in the market, it’s possible that at best your house is worth only what it was worth when you bought it. At worst, for those that bought at the peak of the housing market prices, it’s possible that you have lost quite a large chunk of what you paid for the house.
The problem here is that you could find that your current mortgage borrowing is too high for the lenders to be happy to lend to you. For example, if they were happy to lend you 90% of the value when you bought the house and it has now dropped in value by 10%, although the amount borrowed would be the same, the amount as a percentage of the house value has shot up to 100%. Many building societies are now dubious about such high lendings, in a lot of cases penalising those who are borrowing more than 75%. So although your borrowing might have seemed OK to the banks when you took out your mortgage, now they might not touch you with the proverbial barge pole.
And it’s not just those that have suffered house price drops that are in this difficult position. Until recently some banks would actually lend up to 125% of the property’s market value. 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 borrow more than 90%. This would leave a lot of lenders unlikely to be willing to help you.
If you are stuck with an expensive mortgage and want to move to a cheaper one, then the mortgage market can be a mine field. Make sure that you contact a mortgage advisor and let them compare current remortgage rates for you, to see if they can find some good suitable deals for you.
Keith Lunt writes on behalf of the comparemortgagerates.co.uk website, where you can find useful information about mortgage rates and contact a local broker who may be able to assist you in finding a new mortgage deal.
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