Some Remortgaging Issues You Should Always Be Prepared For
- By Howard Ogollegos
- Published 10/31/2011
- Real Estate
- Unrated
After several years in the doldrums it is only now that confidence in the UK mortgage market is starting to return. The recession and other well documented economic problems over the last three years have led to falling house prices and a severe contraction in mortgage lending, although there are signs that deals on remortgages are starting to improve.
Before 2008, lenders tended to offer 10 per cent mortgages which covered a property's total value; high risk loans of up to 125% were not unknown. On the surface of things this was excellent news for first time buyers, because they were allowed to purchase a home without having to save for a deposit, and the extra funding allowed them to style, decorate, furnish and sometimes even extend the property.
After the credit crunch in spring 2008, the majority of lenders radically reduced the percentage of loan to value (LTV) that they were willing to lend, and all home loans of more than the property's value were abolished, it is unlikely we will see such extravagant lending again.
These days, many lenders will only agree a mortgage for up to 80 per cent of the value of a property. This has meant that first time buyers have had to find a large deposit if they want to get onto the housing ladder. With many young buyers not being able to save such substantial deposits, thousands of people have been unable to buy.
This reduction in 'loan to value' has also had an effect on people looking to remortgage. Thanks to falling house prices and reduced LTV limits, many borrowers no longer qualify for the best remor
tgage deals and are therefore left unable to switch mortgage lenders.
They should now wait either for the borrowing criteria from banks to improve or for the equity stored in their property to grow by a sufficient percentage, and with the economic outlook as bleak as it is, it is uncertain which is likely to happen first?
Homeowners who have large amounts of equity built up in their property should not have issues with obtaining a good remortgage deal, and remaining with your existing mortgage lender would make the process quicker and more simple.
If you have a mortgage with an introductory rate such as a fixed or discount rate period that is coming to an end, you should contact your lender to see what they can offer you. Then you can compare this to the marketplace to see if other lenders can better the deal.
If you are in this position, it is wise to shop around and compare remortgage rates before you take a deal offered by your current lender. Make sure you take any costs incurred as part of a remortgage into account when deciding whether to stay put or to switch to another provider. Costs can include valuation, arrangement and legal fees.
If you are in need of sound advice on choosing the best product for you, you might want to discuss your plans with your current lender or with an independent mortgage broker. By law your current lender can only advise on their own products and services, brokers must give impartial advice and often have access to deals not available on the high street. Brokers do charge for their services however, so you should investigate as many broker rates as possible and take time to make your mind up before you agree to take a broker on.
Before 2008, lenders tended to offer 10 per cent mortgages which covered a property's total value; high risk loans of up to 125% were not unknown. On the surface of things this was excellent news for first time buyers, because they were allowed to purchase a home without having to save for a deposit, and the extra funding allowed them to style, decorate, furnish and sometimes even extend the property.
After the credit crunch in spring 2008, the majority of lenders radically reduced the percentage of loan to value (LTV) that they were willing to lend, and all home loans of more than the property's value were abolished, it is unlikely we will see such extravagant lending again.
These days, many lenders will only agree a mortgage for up to 80 per cent of the value of a property. This has meant that first time buyers have had to find a large deposit if they want to get onto the housing ladder. With many young buyers not being able to save such substantial deposits, thousands of people have been unable to buy.
This reduction in 'loan to value' has also had an effect on people looking to remortgage. Thanks to falling house prices and reduced LTV limits, many borrowers no longer qualify for the best remor
They should now wait either for the borrowing criteria from banks to improve or for the equity stored in their property to grow by a sufficient percentage, and with the economic outlook as bleak as it is, it is uncertain which is likely to happen first?
Homeowners who have large amounts of equity built up in their property should not have issues with obtaining a good remortgage deal, and remaining with your existing mortgage lender would make the process quicker and more simple.
If you have a mortgage with an introductory rate such as a fixed or discount rate period that is coming to an end, you should contact your lender to see what they can offer you. Then you can compare this to the marketplace to see if other lenders can better the deal.
If you are in this position, it is wise to shop around and compare remortgage rates before you take a deal offered by your current lender. Make sure you take any costs incurred as part of a remortgage into account when deciding whether to stay put or to switch to another provider. Costs can include valuation, arrangement and legal fees.
If you are in need of sound advice on choosing the best product for you, you might want to discuss your plans with your current lender or with an independent mortgage broker. By law your current lender can only advise on their own products and services, brokers must give impartial advice and often have access to deals not available on the high street. Brokers do charge for their services however, so you should investigate as many broker rates as possible and take time to make your mind up before you agree to take a broker on.
Howard Ogollegos
Howard O'Gollegos writes for Just Commercial Mortgages.com the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.
View all articles by Howard Ogollegos