Fee-free deals could make remortgaging worthwhile

Do you remember the good old days when you could remortgage on to a low rate and the lender would pay for your valuation and give you legal services for nothing and they wouldn’t even charge an arrangement fee?

Those were great times, weren’t they?

Well in the middle of a credit crunch you might be surprised to learn that fee-free remortgage deals are still alive and well and not only is there a reasonable amount of choice, but the rates on offer are pretty attractive, with some below 4%.

Read more: Fee-free deals could make remortgaging a worthwhile move

Halifax to rescue borrowers in negative equity with 120pc remortgages

HBOS, which is part of Lloyds Banking Group, will consider offering a new mortgage to customers in negative equity whose existing deal, such as a fixed rate, is about to expire.

Normally such borrowers would see the rate they pay revert to the lender’s standard variable rate (SVR) and would be unable to remortgage if the new loan were greater than the current value of the property as a result of the decline in house prices.

Read more:  Halifax to rescue borrowers in negative equity with 120pc remortgages

IVAs and the slowing economy

In response to economic data from the Office for National Statistics (ONS), debt experts DebtAdvisersDirect.co.uk remind consumers that the right debt solution can help them regain control of their debts, despite the unpredictability of the UK’s finances.

On 30 September, the ONS confirmed that GDP growth (Gross Domestic Product – a measure of economic activity) had been 0.0% in the second quarter of 2008, down from the 0.3% reported for the first quarter.

In other words, although the UK economy isn’t in recession (usually defined as two consecutive quarters of negative growth), nor is it experiencing growth – the usual state of affairs under ‘normal’ circumstances. More worrying yet, the economy would have to decline only slightly for the remaining six months of the year to be officially classed as ‘in recession’.

“It may be hard for people to see such macro-economic statistics as relevant to them as individuals,” stated a spokesperson for DebtAdvisersDirect.co.uk, “but the impact is all too likely to make itself felt in the average UK citizen’s daily life. In general, a slowing economy means everyone has less money: not just employees and employers, but the government itself. Given the rapid rises we’ve seen in the cost of living, any threat to a household’s income should be taken extremely seriously.

“People with high levels of debt, struggling to keep up with their debt repayments, are particularly likely to worry about the effects of a slowing economy. There may be little they can do to influence their utility bills, the price of food, or even their job security, but there may be something they can do about their debts – whatever debts an individual is facing, if they become unmanageable, there are a range of debt solutions available that could help reduce their payments and bring their debts under control.”

For people with unsecured debts of around £15,000 or more, an IVA (Individual Voluntary Arrangement) may be the most appropriate debt solution. An alternative to bankruptcy, an IVA is a form of insolvency that helps people bring their monthly debt repayments back down to an affordable level and – in the longer term – clear those debts entirely.

“An IVA is a legally binding agreement between an individual and their creditors. In brief, the individual agrees to make fixed monthly payments for a set period (normally five years), based on what they can afford to pay after taking essential living expenses into account. If they own their home, they may also be required to free up equity in their home (towards the end of the IVA) to increase the amount they can pay their creditors.

“It’s a big commitment, but their creditors will, in return, agree to freeze interest, not to take any legal action (such as pushing for bankruptcy) and to write off any outstanding debt once the IVA has successfully concluded. So an IVA can deliver clear benefits to borrowers and creditors alike.

“Finally, should the borrower’s circumstances change during the course of the IVA, they can request an ‘IVA variation’ – it’s in the creditors’ interests as well as the individual’s to make sure the IVA succeeds, so they may well agree to alter the terms of the agreement if this is clearly the best way to bring the IVA to a successful conclusion.”

Getting a remortgage

Getting a remortgage is one of the biggest financial decisions you will have to make. As with a new mortgage, it’s a big financial commitment – but when it comes to remortgaging, it’s possible to save yourself a lot of money each month compared with your existing mortgage agreement.

Why do people remortgage?

End of existing mortgage deal

Most mortgage deals offer special terms that usually last a few years before reverting to the lenders standard variable rate, and once those terms are up, it’s time to remortgage.

You can either remortgage with your existing lender, or with a new lender. The most important thing for you will probably be finding the mortgage deal with the lowest interest rate in order to keep your monthly payments as low as possible.

Debt consolidation remortgage

If you are in debt, you can also use a remortgage to help repay those debts. A debt consolidation remortgage involves withdrawing some of the equity in your home (e.g. any deposit, payments you have made and any increase in your home’s market value) and using it to pay off your debts. You will then repay the borrowed amount on top of your regular mortgage payments.

Tips for getting a remortgage

If you are looking for a remortgage, it’s sensible to take a few simple steps to improve your chances of getting the best deal.

1. Check your credit history

Your credit history is a record of all your credit activity over the past few years. When you apply for credit (including a remortgage), the lender will assess your credit history, based on their own lending criteria, to decide whether or not they can lend you the money.

However, mistakes can sometimes occur – and it’s important to ensure that your credit history is up to date and free of errors in order to give the best account of your credit activity.

All the major credit reference agencies (Equifax, Experian and CallCredit) offer online credit check facilities. If you find any errors on your credit file, all you need to do is call the creditors concerned and ask to have the entry corrected.

2. Take your time

It’s important to give yourself adequate time when looking for a remortgage. Don’t leave it until the last few weeks. Two or three months should be enough to get a reasonable idea of the range of mortgage deals on offer, and where to find them.

Some lenders will allow you to ‘reserve’ your mortgage deal a few weeks in advance – so you shouldn’t have to worry about the best deals being taken off the market shortly before you start your new terms.

3. Get professional mortgage advice

It’s possible to search for a remortgage on your own, but a lot of people prefer to get help from a professional mortgage adviser. Speaking to a mortgage adviser about finding a remortgage can greatly reduce the time and effort involved in finding the best remortgage deals.

A mortgage adviser will be happy to give you free, impartial advice on your remortgage, and may be able to help you find the best deal for your circumstances.

If you are looking for Mortgage Advice click here.

Mortgage hunting? Find a 40% deposit

A quarter of mortgage deals are available only to borrowers with a 40% deposit, it was revealed yesterday.

With an average property price of £160,000, this means £64,000 is needed before a lender will offer its best deals.

The findings emerged in research highlighting the nightmare facing anyone trying to buy a home or remortgage during Britain’s mortgage drought.

Just 24 deals required a 40% deposit last February. Less than a year later, this has soared to 341, according to financial information firm Moneyfacts.

Read more

Caution advised over remortgaging for equity release

Responding to the findings of a study showing that large numbers of homeowners have looked to equity tied up in the value of their homes to “get through hard times”, financial solutions company Think Money have advised people who are struggling with debt to consider their options carefully, and if necessary, look into alternative debt solutions.

A report from the study, carried out between 2001 and 2005 by researchers from Durham University, claimed that “struggling households have borrowed against their homes to meet their basic needs”. It also claimed that remortgage equity withdrawal had become more common in recent years, with two in five homeowners ending up with higher mortgages than the previous year in each year of the study.

On average, the households studied added £5000 to £7500 to their mortgages in a given year – and some withdrew up to three quarters of the equity in their homes this way.

A mortgage expert for Think Money commented: “While an equity withdrawal remortgage can be a very useful source of additional funds, it’s important that it is used carefully and that the borrower can afford to repay the full amount.

“Remortgaging to withdraw equity can be a useful way of raising funds. However, we would advise that a remortgage as a form of debt consolidation is a big financial commitment that carries a big risk to the homeowner.

“On the one hand, the difference to the homeowner’s mortgage payments can be relatively small, since they can be spread over up to the duration of the mortgage. But on the other hand, it is a reduction in the homeowner’s equity, which increases the risk of negative equity. Also, since a mortgage is a secured debt, the homeowner can face repossession if they run into trouble with future payments.

“As such, remortgaging to help meet day-to-day costs could put the homeowner at unnecessary risk, unless it has been thoroughly thought out beforehand. If the homeowner is already being pushed to the limits by debt, a debt consolidation remortgage might not make a significant improvement to their situation, and could increase the risk of repossession.”

The Think Money spokesperson added that there are other ways of addressing financial difficulties. “The first thing we advise people who are struggling to meet their financial commitments is to seek independent financial advice. They may simply advise the person in debt on how to approach their creditors and negotiate reduced payments or a payment holiday.

“If the problem is more serious, and the debt is becoming unmanageable, there are a number of debt solutions that could help – for example a debt management plan or an IVA (Individual Voluntary Arrangement). Both of these can help to reduce monthly outgoings without risking repossession.

“As with any debt solution, it’s always advisable for homeowners to speak to an expert debt adviser to discuss their options.”

Plan remortgages ‘well ahead of time’

Landlords looking to remortgage should get ready to do so after three to six months.

This is the advice of Kate Faulkner, managing director of Designs on Property.

Noting that mortgage costs increases are “pretty horrendous”, she said that seeking a remortgage must be started “really early”.

She also recommended that landlords obtain valuations of their properties as early as possible.

“You need to know how much more money you are going to have to give now rather than later on,” she stated.

According to research carried out for Cheltenham & Gloucester, published in September, 32 per cent of people would opt to stay with their current mortgage lender with a higher rate than risk being rejected by another.

The survey, conducted by Tickbox and Opinion Matters, also revealed that 42 per cent of homeowners are concerned about the lack of choice within the mortgage market.

Recent figures form the Council of Mortgage Lenders have shown that while 41,000 home loans were approved in August, this dropped to 35,000 in September.

source

Rentman rent management software

This article was brought to you by Rentman the premium rent management software.

Landlords using property software should think about remortgaging sooner rather than later, an expert has warned.

Kate Faulkner, managing director of Designs on Property, commented that following the effects of the economic downturn on the residential lettings market and the wider economy, increases in mortgage costs have been “pretty horrendous”.

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Remortgage Loan Process

Most of the borrowers find it difficult to avail remortgage loans. They don’t know where to seek such loans. With little research done online, one can avail a remortgage loan quickly. Remortgage loans help put an end to earlier high interest rate mortgage loan and switch over to a new remortgage loan available at a lesser rate of interest. The borrower has two options open; either switch from one lender to another or apply for mortgage remortgage with your current lender itself. If you do remortgage with your current lender it normally involves changing your existing deal. The process to get remortgage loan thorough Loan Company is the easiest one.

Mortgage loan companies have abundant experience in offering mortgage loans. With refinance mortgage, one can get a better deal that helps one save money and also enables you to take loans for bigger amounts payable over a longer period of time. These companies specialize in providing the bets remortgage loans. They understand well how difficult it can be to be mired in debts. The constant anxiety regarding finances and the stress can indeed be stressful. The simple solution for such situation would be opting for a remortgage loan.

Remortgaging your loan would simply mean putting an end to your earlier high interest rate mortgage loan and switching to a new remortgage loan provided at a lesser rate of interest. You have two options open to you; you either switch from one lender to another or apply for remortgage with your current lender itself. If you do remortgage with your current lender it normally involves changing your existing deal. This new better deal helps you save your money and also enables you to take loans for bigger amounts payable over a longer period of time.

It is advisable to do a careful research before considering to shift from mortgage to remortgage loan. Some lenders also charge fees. This can be avoided by looking online. Remortgage Loan Company can help get a suitable remortgage loan suiting the personal needs. There are many financial specialists offering best remortgage advice.

Remortgage advice can help take the right decision regarding remortgage. Remortgaging is done when you replace an existing mortgage with a new mortgage without moving home in order to release capital or reduce interest payments. This can involve changing mortgage lender or opting for another product with your existing lender. Remortgaging has been a significant factor in reducing repayments and releasing capital as well as paying off a mortgage early. It can also be a useful means of consolidating debts. Many people are worried if remortgage can help pay off debts. Remortgaging can offer some relief as a debt solution for people experiencing a certain level of debt. If you have owned your property for some time, then chances are that it could be worth more than your outstanding debt.

Free Time Proven Tips About How to Compare Remortgage Rates

A lot of people are currently finding that their existing mortgage offers are reaching the end of their period of benefits and are now having to shop around the markets for a new mortgage. So if you are desperately trying to compare remortgage rates of everything available, what are some of the main types of mortgages available on the mortgage market today?

Fixed Rate Mortgages – this is the most simple idea and a very popular choice. For a set period of time you agree with your bank what the interest rates will be that are applied to the mortgage. Once you come to the end of this fixed rate period you may be free to move to another product within the same lender; you may be able to move to another lender or you may have to stay with your current lender for a the remainder of an agreed term at their variable rate.

The advantage of a fixed rate mortgage is that you can budget exactly what your repayments will be during the term. The disadvantage – well if rates drop, then your rate is not going to be affected. And if rates do climb, then at the end of the fixed rate period you are going to be in for a rather nasty shock.

Libor Rate Mortgages – these are based around the rate at which banks are lending to each other. At the moment, maybe not a good choice with banks struggling to lend and borrowing between themselves. But if you feel that the banking situation is improving and don’t want to rely on the central banks making rate cuts, then this can be a possibility.

Capped Rate Mortgages – this is a mixture of the fixed rate mortgage and the bank’s standard variable rate. Your mortgage follows the changes to the bank’s mortgage rates as they would if you were on the standard variable rate, but there is a limit to the maximum interest rate the bank or building society will charge you. If interest rates climb above the capped level, you have the security of knowing that your payments aren’t following all the way. Better still, as interest rates come down, so will your repayments. The disadvantage is that the capped rate can sometimes be slightly higher than the equivalent fixed rate.

Tracker Mortgages – these tend to track the central bank’s interest rate, with a small amount added on. Whenever the base rate is changed the rate you are charged will follow. This can be great in a volatile markets when the banks are not following the base rate changes immediately, but watch how much you are paying over the base rate, just in case another type of mortgage is cheaper. Also, you really are at the mercy of the base rates – every time they change your payments [spin]change. And not all of these payment changes are going to go in your favour.|change.[spin]

Whatever mortgage product you are thinking of, make sure that you compare mortgage rates for a few different types of mortgages and ask a broker to talk you through what is best and make sure that you are choosing the type of mortgage that really is best suited to your needs and financial outlook in life.

And never forget that even a nasty mortgage can be negotiated for a much better one – learn how to negotiate mortgage here.