Finding A Remortgage In today’s Market
Breaking news from the Halifax Bank who are reporting a 13% drop in house prices for the last year. They claim that the current house price drop is the fastest and the largest house price drop they have ever recorded. The Halifax says that the monthly house price drop of 1.3% per month is now in its eighth consecutive month. Finding a remortgage just got harder.
This means that house prices are worth the same as they were in January 2006. This is great if you’re in the market to buy a home and a nightmare if you need to sell your home. For the rest of us homeowners the drop in house prices is not an issue as long as you have no intention of selling your home at present.
The average value of a home prior to the announcement by the Halifax Bank was £170,000. Today that same house is worth 13% or £22,100 less. This means that the average house in the UK is now valued at £147,900.
There is a belief that the housing market will always bounce back after a downfall – but there is no guarantee that it will always happen. Remember the 1980’s when house prices did not move for nearly a decade and the negative equity affected lots of homeowners. Be cautious! However finding a remortgage then was relatively easier than today.
Finding A Remortgage At 90% to 95% Loan-to-Value Is Difficult
This drop in house prices is bad news for homeowners that are struggling to find a remortgage at 90% to 95% loan-to-value. This report from the Halifax Bank means that more homeowners are now in negative equity and there are no mortgage products available above 95%. In order to qualify for a 95% mortgage or remortgage you do need to have an excellent credit file with no missed payments and have been employed for longer than a year.
While we had an interest rate cut yesterday it still needs to filter down to homeowners. Anyone with a Tracker, Discount or a Standard Variable Rate Mortgage should see an immediate reduction in their monthly mortgage payments. For example someone with a £100,000 mortgage will see a reduction of £41.66 in their mortgage repayments per month.
Unfortunately, anyone with a fixed mortgage will find that they are not affected by the current mortgage rate reduction. If you have a fixed rate mortgage you will have to wait for your mortgage scheme to come to the end of the penalty period before finding a remortgage a better deal.
Don’t be in rush into finding a remortgage or looking for the best mortgage or buy-to-let deal available. It is going to take time for these new rates to filter through the system properly so don’t just go for a quick mortgage or new remortgage now, wait and watch as the rates feed through over the coming weeks. The City is still expecting a further rate cut from the Bank of England before January 2009 – be patient!
The money-saving expert will recommend that you look to credit card consolidation in order to get rid of your highest interest rate payments. The same money saving expert will often recommend that you consolidate your secured homeowner loan within any new remortgage arrangement. This works well, if you need to reduce your monthly outgoings in order to live. However, you need to consider that you will be putting what is generally thought of as a short term debt over a long term period and you will therefore pay substantially more in interest over the term.
I would recommend that you find a mortgage consultant or a mortgage broker who will assess your personal situation in terms of your needs, wants and affordability and then search the whole mortgage market for the best mortgage product to suit your personal circumstances. Only deal with a mortgage consultant who uses the whole of the mortgage market as this is the only way you will find the best mortgage available, do not entertain a consultant who only uses a panel of lenders. This makes finding a remortgage easier.
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