It’s become increasingly clear in recent months that getting a mortgage or remortgage is extremely difficult, with rates rising and availability of mortgage products dwindling.
1.4m property owners whose mortgage deals come to an end in 2008 will be looking for a new deal, according to the Financial Services Authority. At the same time, the Bank of England recently reported that loans for remortgages fell to 69,000 in July, down from 80,000 in June and an average of 96,000 over the previous six months. CLG confirmed this morning that we are well and truly in a housing slump, and homeowners and buy to let investors need to take a firm grip on the remortgage market and be well organised if they want to secure the best deals.
With all this in mind, I’ve put together five key tips to help you get the right deal in a difficult market.
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Assert your financial credibility. In the current market, banks and lenders are extremely cautious about whom they give loans to so be ready to show your track record in meeting your existing mortgage repayments. Also consider re-using lenders who already know you to be a reliable customer.
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Speed up the legal process. Once you’ve found a good deal, you can speed up the remortgage process by making sure the legal part is completed efficiently. Simon Manuel of Clegg Manuel solicitors, specialists in residential property transactions, advised me that if you are ready with documentation early on, your lawyers should be able to complete the legal process quickly to ensure you secure the deal you want. Typically, they need to receive documents such as a current Building Insurance Certificate, a Planning Permission and Buildings Regulations Completion Certificate for any alterations which have been carried out to your property. If you are renting out the property, you’ll also need to provide a copy of the tenancy agreement.
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Check your contract terms. Make sure the terms of your mortgage allow for your specific requirements. If, for example, you rent out the property, your lender must allow for this within the terms of the deal.
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Invest some capital. The best interest rates will also be available when you own a larger portion of the property outright. Many lenders now limit remortgages to 80% of the property’s value, so you would have to own at least 20% of your home’s value in equity in order to get a remortgage deal with them at all.
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Think about it early. If you leave it too late to arrange your remortgage you could find that you revert to your lenders’ standard variable rate, which in the current climate is likely to be an uncomfortable place to be.
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