Re-mortgaging Advice During The Credit Crunch
Topics: mortgage, remortgage, negative equity, mortgage lenders
The credit crunch has bought all kinds of uncertainty to the world of mortgages. Much has been written about the impact of the downturn’s impact on first time buyers, when actually the financial environment could have much larger impact for the people whose mortgage is due to expire.
In the past, if you had a fixed rate mortgage when your deal expired you shopped round for a new deal. The problem with this is most people didn’t worry too much about interest rates. However as they have risen, it’s becoming harder and harder to get a good fixed rate deal and many people have found themselves with fairly dire financial situations.
Can’t get a better deal? The cost of living is rising at the moment. Fuel and the cost of running a car has increased, which means more than ever people would like to save money on their mortgage. If you just switch to a variable rate, there is a strong likelihood you will have to pay more, which means less money in your pocket.
Equity isn’t enough. A lot of people took out mortgages where they had no or small deposits. The problem they are now finding if they want to change their mortgage, is that they don’t have enough equity to please banks’ and lenders’ more stringent requirements. This is made even more difficult if the value of your house isn’t increasing in value or, as in many cases, falling. Here you have a number of options: downsize to a house where you would have enough equity to secure the mortgage, or try and find an accommodating lender.
125% mortgage discontinued - when credit and mortgages were more readily available, many people were seduced by mortgages where they were lent more than the value of the house. These mortgages are no longer available, which has left a number of people effectively in negative equity when they need to secure their mortgage against their home.
Staying with your provider helps in most circumstances. Remaining with the same provider helps you get the new mortgage. If you are a good payer, haven’t defaulted and generally are a good customer, they’ll be happy to keep you on their books. You might see offers of better deals, but in uncertain times like now, it can be easier not to rock the boat by changing providers.
Don’t forget the fees. In the past many lenders rolled their fees into your mortgage. I.e. if you incurred costs of 1000 pounds you just borrowed a grand more. However, many firms are now asking you to cover these costs upfront, which can sometimes mean you have to find quite a substantial sum of money when moving your mortgage. If this is something you expect, you can make provisions to cover the costs, so be prepared.
A Quick Sale are one of the oldest and most trusted names in the world of home buyers.
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