loan search for homeowners

The law of supply and demand is, unfortunately, one of the basic rules of economics. In the present climate, which has restricted the supply of funds available for mortgage lending, whilst there has been no corresponding let up in the demand for such lending from borrowers, only one thing can happen to prices – they have inevitably risen. The effect of this is that the cost of mortgage borrowing has overall gone up. There is probably less prospect today of finding a cheap remortgage than there was this time last year.  

But that is not to say that those with an existing mortgage should simply dismiss any notion of looking for a remortgage and do nothing. Far from it and, indeed, some borrowers, such as those coming to the end of a fixed term for a particular deal, should be positively encouraged to search for a cheap – or at least attractive – remortgage, rather than revert to what can often be their lender’s expensive standard variable rate.  

Very broadly, mortgage lenders come in one of two guises – they are either banks or they are building societies. Both players themselves borrow money in order to lender to individual mortgage borrowers. Both also fund mortgage lending from savings deposits made by customers. The possible difference is that banks have tended to lend on borrowed funds rather more than building societies, which have a longer tradition of lending on members savings. The result is that building societies may sometimes have an edge on the banks when it comes to offering slightly cheaper remortgages, so always get a broker to shop around on your behalf for a mortgage. Never just apply for the first attractive remortgage deal that comes up, as there could be even better one in the market place.

There is no doubt that the best deals are going to those with a good credit history. Even if you have made all of your current mortgage repayments, but have fallen behind with other debts, such as credit card repayments, then your credit rating is likely to have suffered. You will need to repair this in order to stand any chance of securing a remortgage at the best rate.  

If you are approaching the end of a fixed rate term on your current mortgage, then it makes sense to prepare well in advance for your remortgage – and be prepared to move quickly to snap up a good deal when one is offered and before it is withdrawn (the market remains in a fairly high state of flux these days and it is not possible to rely on any particular deal being around for very long). If you reach the end of your current lender’s fixed rate term and have still not lined up a remortgage of your choosing, then you would, by default, revert to that lender’s standard variable rate of interest, which is almost certainly not going to be the most favourable rate around.   

To finish, finding a cheap remortgage can be more difficult now than it has been in the recent past. But that is not a signal to do nothing, because: 

• There are some still reasonably attractive rates on a remortgage;
• You will need a good credit history to secure the best rates, so if yours is less than near-perfect, take steps to repair it before you apply for a remortgage; 
• If you are approaching the end of a fixed term arrangement with your current lender, prepare to remortgage well in advance, or you may end up left with an expensive standard variable rate mortgage.

This remortgages article has been written by Mel Harley.

This article does not represent ‘financial advice’ as each individual's personal requirements will be unique to their own specific needs. If there is something in this article that you wish to rely on then please check those details with the person with whom you arrange a financial product or service.

The views in this article represent those of the author and not those of Netbasic Limited.