Finding A New Mortgages Does To Be A Good Idea, But Not To Everyone.

Mortgage completions are crumbling to a low and the bank’s base rate is predicted to hit an all time low. Is this the time to be hunting for a remortgage?

Well, it all is dependent very much upon your own personal financial circumstances. If you are locked into a mortgage with redemption penalties then looking for a new mortgage might cost you more that it would save you. But if your current product is approaching the end of the penalty term, or has finished any lock in periods, then it might be worth trying to compare mortage rates to check if there is a more efficient product out there on the market.

There is also, sadly, another group of people for whom finding a new mortgage rate might not be an easy or a cheap option. If you are unlucky enough to have bought your property within the last couple of years, then with the plummeting house prices currently seen in the market, it’s possible that at best your home is worth only what it was worth when you bought it. At worst, for those that bought at the peak of the property prices, it is probably 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 building societies 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 charging more to those who are borrowing more than 75%. So although your borrowing might have seemed OK to the banks when you took out your current 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 building societies would actually lend up to 125% of the home’s market value. If you were in this position when you took out the product, 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 banks unlikely to be willing to help you.

If you are stuck with an expensive product and want to move to a cheaper one, then the remortgage market can be a mine field. Make sure that you contact a mortgage advisor and let them compare remortgage rates for you, to see if they can find some suitable deals for you.

Keith Lunt writes on behalf of the comparemortgagerates.co.uk website, where you can find useful information about today’s mortgage interest rates and contact a local broker who may be able to assist you in finding a new mortgage deal.

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