Mortgage Advice » remortgaging

Biggest Mortgage Mistake – SVR

admin — Fri, 15 Feb 2008 08:37:52 +0000

The simplest yet most common mistake of any mortgage holder is to stay on a mortgage lenders SVR. Standard Variable Rate.

A Standard Variable Rate would be better called. ‘Our most expensive form of mortgage’. If you look at any of the big mortgage lenders, you will see that they have a range of mortgage products which offer a more competitive rate than their SVR. It might be worth asking why mortgage lenders do this. The reason is that when people are taking out a mortgage they are looking for the most competitive rate. Therefore, mortgage lenders offer special deals to new customers such as tracker mortgages or fixed rate deals. However, these only last for 2-5 years. After the introductory period the mortgage rate defers to the standard variable rate. Therefore, long standing customers can end up paying much more than new customers. The banks are merely taking advantage of consumer inertia to make a bigger profit margin.

How To Avoid this Mistake

It is fairly easy and painless to avoid this basic mistake. At the end of your mortgage term renegotiate a new mortgage deal with your existing bank or move your mortgage to another company. True it might take an hours or so. But, if moving your mortgage saves you £100 a month, it would be a shame not to take advantage.

It is estimated that a significant % of households are stuck on their mortgage lenders Standard Variable rate. Don’t throw money down the drain remortgage to day.

Top 10 Tips for remortgaging

Bad Credit Remortgages

admin — Tue, 02 Oct 2007 07:06:18 +0000

As the number of people with bad credit has increased there has been a corresponding rise in the number of companies willing to offer bad credit mortgages and adverse credit remortgages. Typically, these have been the most profitable aspect of the mortgage industry. This is because the poor credit ratings enable companies to lend at higher rates of interest than for a standard mortgage.

However, the adverse credit, or subprime sector, has been hit by the US mortgage crisis. The impact of mortgage defaults in America has been to make the cost of selling on bad credit mortgage much more expensive. Basically, this means companies are less willing to lend money for bad credit mortgages. They are also increasing in cost because of the increased risk associated with rising defaults.
For those looking to get a bad credit remortgage the cost is likely to be increasing quite soon.

Bad Credit ReMortgage Loans in UK

Credit Crunch leads to higher mortgage costs – How the credit crunch in the money markets is triggering higher borrowing costs, especially for bad credit mortgages. – Article at the Times

Northern Rock and Remortgaging

admin — Mon, 17 Sep 2007 10:03:59 +0000

This week Northern Rock is likely to see savers flock to the bank to withdraw their savings.

Last week, Northern Rock suffered a severe credit shortage. As a result they had to borrow emergency funds from the Bank of England to ensure liquidity for its mortgage business. The last time the Bank of England had to act as lender of the last resort was in 1973. Although the FSA and Bank of England said there was no chance of the bank going under, savers appear not to have been pacified, as a result £2 billion has already been withdrawn.

The problem of Northern Rock originated from the fact their mortgage lending was not secured by customer savings. Instead they borrowed from financial institutions. This was fine when the markets were doing well. But, since the sub prime collapse in America, lending has become a lot more conservative. As a result Northern Rock couldn’t get enough temporary funds.

Where does this leave Customers with a mortgage at Northern Rock?

Firstly, it is unlikely the bank will go under. It is in the interests of the whole UK banking system to prevent a bank going under. This will make future panics more likely. It is essential for the Bank of England to maintain confidence in banks and the financial system. Without rock solid confidence, the banking system will find it difficult to function.

Therfore, at the moment I would suggest those with a mortgage at Northern Rock, need not panic and seek to switch accounts.

It is quite possible the crisis may result in Northern Rock will be taken over by a bank like HSBC. IF this occurs it is of course essential to check if your mortgage changes and remortgage if appropriate.

Remortgaging through self certification

admin — Mon, 06 Aug 2007 13:37:55 +0000

Self certification is often associated with the sub prime / bad credit section of the mortgage industry. However, in practice self certification mortgages have become increasingly main stream in recent years. Evidence suggests that the self certification market is likely to continue its growth.

Traditionally self certification mortgages are aimed at actor, sportsmen, – the self employed who have a volatile or hard to prove income. In these cases a self certification mortgage is often the best way to get around rigid lending criteria.

However, employed people may also find that using self certification mortgages are the best way forward.

See: who is eligible for a self certification mortgage

If you took out a sel certification mortgage with a relatively low deposit, chances are you will be facing interest payments higher than most mortgage deals. If your house price has risen giving you a greater share of equity, make sure you take advantage of any possible remortgage. A new deal is likely to have lower interest payments because you have proved a steady period of repayment and now have more equity in the house.

Reasons for Remortgaging

admin — Fri, 01 Jun 2007 20:27:00 +0000

Remortgaging is an opportunity to both save money and, if necessary, raise capital against the value of your house.

Remortgaging for Equity withdrawal.

If you bought a house with a £130,000 mortgage and the value increased from £150,000 to £210,000, the bank is likely to agree to lend a bigger mortgage.
Assuming your income is sufficiently high, they may increase the size of your mortgage from say £130,000 to £170,000. This means you have an extra £40,000 to spend or pay off other debts. It means that your monthly payments will increase. Also, over the course of your mortgage term, you will pay extra interest payments on the higher debt. Therefore, there should be a clear purpose to remortgaging. One of the best uses of remortgaging is to pay off other debts, which have higher interest payments. For example, if you have credit cards the APR can be as high as 17% (on store cards it can be even higher). If this debt can be consolidated into your mortgage, the debt payments are likely to fall significantly.

Remortgaging to save monthly payments.

The mortgage industry is set up to reward those who actively seek to change their mortgage plans. Lenders usually seek to benefit from homeowner apathy. Basically, there are upto half a million home owners who stay on their banks APR, when they could easily switch to a lower rate. Banks and building societies offer a variety of rates. The most attractive rates, such as a discounted tracker mortgage are aimed at new clients and or those seeking to remortgage. The introductory rates usually run for a couple of years; at the end of this term your mortgage plan usually reverts to the higher standard variable rate. Therefore, whenever these introductory periods end (and you are free to move without any early penalty charges) you should be ready to switch your mortgage to a new introductory rate.

UK Mortgage Re finance

admin — Sun, 22 Apr 2007 18:07:00 +0000

There are an increasing array of options open to people looking into re financing (or remortgaging) It is worth investigating the various options available to you as it can make a significant difference to your monthly repayments.

These suggestions will help you to get the best deal on mortgage refinance.

1. Contact your existing mortgage lender.

This can save you time and hassle. Most mortgage lenders will give you pre qualification; there will be no need to show your financial situation. This is particularly useful if your income has fallen in the time period. Also there will be no exit fees associated with leaving your existing mortgage lender. If your existing mortgage dealer is unable to give you a competitive refinancing deal then it is worth considering others.

2. Time Period of Mortgage.

Re financing is not just about getting a better interest rate on your mortgage. Refinancing can reduce your monthly payments through other methods as well. One of these is the option to extend your mortgage term. This means you will pay over a longer period of up to 50 years. It means the interest payments will increase but in the short term you will see lower monthly payments. This is useful for those who are experiencing short term capital flows.

3. Different Type of mortgage.

When refinancing your mortgage it is worth looking around to see whether there may be a better type of mortgage on offer. For example there is no need to necessarily stick to the standard repayment mortgage. For example if you have a considerable amount of savings in your current account you may wish to take out a current account mortgage.

4. Shop Around for Best deal.

There are many different types of mortgages available. It is not necessarily the case that the large high street building societies will give the best deal. Make sure you work out all the small print and include the various costs into the decision making process. As a general rule the larger your mortgage is the less important mortgage fees are. If you are refinancing a relatively small mortgage, the mortgage fees will be relatively more important.