Remortgaging * cheapest interest * negative equity * end of a fixed rate mortgage * first time buyers * property crash and the credit crunch makes obtaining a mortgage difficult
The mortgage markets have been in turmoil of late and it is only now that some commonsense is beginning to prevail when it comes to lending. Homeowners coming to the end of a fixed rate mortgage have been desperately shopping around with a view to remortgaging and trying to find the cheapest interest rates. Many, finding themselves sitting on a property with negative equity have found themselves unable to remortgage with a new lender.
In recent years, banks and building societies have been raising mortgage fees to subsidise attractive headline interest rates. Mortgage arrangement fees have gone through the roof as have charges for redeeming a mortgage. As a result, you have to do your sums to make sure that what you gain in cheaper mortgage repayments through switching provider - a lower rate of interest - is not lost through higher charges.
Our panel of mortgage brokers will explain your options.
As well as reducing your monthly mortgage payments, by remortgaging at a cheaper rate of interest, you can also use remortgaging as a way of releasing some equity that has built-up in your property's value.
If you are looking to release equity, it is very important to remain cautious. Borrowing through your mortgage may provide cheaper monthly repayments than taking out a personal loan; but the debt is secured on your property and you will be repaying the loan over a longer period. This means that if you can not keep up with the additional repayments, you could risk losing your home.
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Fears that more than one million homes could fall into negative equity - where mortgage debts exceed the value of the property - are rising as house prices continue to fall.
Negative equity is the term commonly used to describe the situation of owning a property that is worth less than the mortgage secured against your home. There is no easy solution to the problem of negative equity and most people will find it impossible to switch lenders.
END OF A FIXED RATE MORTGAGE
If you have a fixed rate mortgage that is coming to the end of it's fixed rate term, you should start looking around for a new mortgage a few months before the deadline. Many people who have a fixed rate mortgage are going to find that their monthly repayments are going to rise considerably.
Two or three-year fixed-rate mortgage deals coming to an end and struck when interest rates were very low, mortgage repayments for most home owners will rise considerably, increasing fears of a surge in the number of home repossessions
FIRST TIME BUYERS
If you're a first time buyer you will need all the help and financial incentives you can get, to buy your first home. The days of the 100% mortgage are all but gone and if you are a first time buyer, you are going to need a much larger deposit as a percentage of the price of the property than you needed in 2007.
On the bright side, property prices are likely to continue falling for some time; so don't rush in without making severe discounted offers on any properties that take your fancy.
The recent property crash has meant that a buyers market has been created but only if you can find a mortgage lender prepared to grant you a mortgage. Banks are still reluctant to get back into the mortgage market for obvious reasons; so you will need a substantial deposit and a property that is under valued.
With so many people in financial trouble and buy to let landlords dumping properties back onto the market, there will be plenty of bargains to be picked up.
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THE CREDIT CRUNCH MAKES OBTAINING A MORTGAGE DIFFICULT
There will be few people hoping to buy a property or remortgage that will not be facing difficulties of one form or another. The credit crunch, combined with the property crash has made obtaining a mortgage difficult and more complex.
Our panel of mortgage brokers are in the best position to shop around and find you a number of alternatives for you to be able to compare and choose the offer that best suits your personal requirements.