Hunting For A Remortgage Is Much More Complicated Today Than A Year Ago.
With mortgage rates currently falling so quickly, you may be wondering if now is the time to swap mortgages to see if you can get yourself a better deal, which over the long term will save you money. But is this as quick to do as it was a year ago? Keith Lunt looks at how difficult this has now become.
Frankly, no. It is now far from easy to find yourself a remortgage offer. The lenders have reacted to the current credit crunch by making it far harder to obtain a new mortgage and at the same time many of the building societies themselves are finding it harder to obtain the money they need for lending to home buyers. If they can’t get the money, they then have to further limit what they lend.
Many of the big building societies have now taken away their easy going dealsand are instead making it much harder for potential customers to take out a remortgage. They are putting huge boundaries around their remortgage deals that potential customers have to be able to climb before they stand any chance of obtaining a remortgage.
Aside from the fact that a lot of the banks have increased the basic mortgage charges, making mortgage far more expensive just to take out, many have taken away deals that would appeal to the customers the lenders are now worried about not being able to keep up repayments. They are securing themselves for the future by only accepting mortgage requests from those home buyers that they are convinced will always be able to pay back their mortgage. They are protecting themselves from the gamble they once used to take of risky lending in return for a high rate of return.
An example of this that is clear to see is the removal by the banks of the 125% mortgage. Now you would be struggling to find a lender willing to give you 90% of the building value as a loan. And in a lot of cases, even securing more than 75% of the property value has become extremely difficult.
So what can you do if you want to remortgage and find a new mortgage rate to save you some cash, and take a benefit from falling mortgage rates? Well you can compare mortage interest rates yourself and see what is about, but many of the rates on offer are only available for certain types of customers. It is more efficient to approach a local mortgage broker and get them to check mortgage rates for you instead. This need not be a difficult search. Many websites offer this contact service, so you can still effectively do the search over the internet. And by using a free service, you are saving yourself time, and hopefully cash.
Remortgaging Does Appear A Good Idea, But Not For All.
Mortgage offers are falling to a low and the bank’s base rate is predicted to hit an all time low. Is this the time to be looking 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 deal might cost you more that it would save you. But if your current mortgage is approaching the end of the penalty term, or has finished any lock in periods, then it might be worth trying to compare today’s mortage rates to find if there is a lower cost deal out there on the market.
There is also, sadly, another group of people for whom finding a remortgage rate might not be an easy or a cheap option. If you are unlucky enough to have bought your house within the last couple of years, then with the plummeting property prices currently seen in the market, it’s possible that at best your house is worth only what it was worth when you bought it. At worst, for those that bought at the peak of the home 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 deal borrowing is too high for the lenders 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 property 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 building societies when you took out your current product, 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 lenders 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 home value has risen by almost 40% or more, you would still be looking to borrow more than 90%. This would leave a lot of building societies unlikely to be willing to help you.
If you are stuck with an expensive deal 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 good mortgages for you.
Keith Lunt writes on behalf of the comparemortgagerates.co.uk website, where you can find useful information about mortgage interest rates and contact a local broker who may be able to assist you in finding a new remortgage deal.
The Key Principals To Claiming Unfair Bank Charges. Background To Reclaiming Bank Charges
The first step to reclaiming your bank charges is very quick – write to the bank and ask them to give you your money back! Yes, really!!! The letter, using a standard letter layout (your address etc at the top) should give a reference of your bank account and include the date it was written.
Then, tell them that you are requesting a refund of all charges applied to your account in the past 6 years. Remind them that Under the Unfair Terms in Consumer Contracts Regulations 1999 fees must reflect administration costs and cannot be punitive. Then list the charges you have incurred and the amounts involved in each, stating that you do not believe the amounts to reflect the true cost to the bank.
Next, state the total amount that you have been charged and request that they refund it to you.
Finally, ask them to repay the money in full within 14 days, otherwise you will commence a claim against them for the entire amount, plus interest and costs. If you are at all unsure, plenty of websites show example letters and include calculators to calculate what you can claim.
You have given the bank 2 weeks to respond, so if it doesn’t write a reminder and phone them. They might try to delay by offering a reply at a later date. In this case, write & phone telling them that you are offering them another 14 days before commencing court proceedings.
Another trick the banks are using is to tell customers that they are mistaken and cannot reclaim or that the charges are not unlawful. In this case, you are probably still at the point of a second letter and then start court action.
If they reply offering the whole claim then you have won. If they offer a partial refund then you have to balance whether it’s enough or whether you want to continue. If the amount of fees involved are small or the proportion they are offering to repay is large, then the effort of continuing a reclaim might make acceptance worth while. But if they are making a very low offer, there might be good rewards in asking for for the full amount. Only you can decide.
If you haven’t got the result you want through letters, then it’s time to resort to bluffing your bank with court action. If your claim is for an amount below £5,000, then you can go through the small claims court, even using the online system! If your total[s/pin] is for [spin]more than £5,000, then see if you can reduce the claim, either by not including all charges (for example if the claim is £5,001) or if the fees relate to more than one account, make multiple smaller claims.
At this point you then need to check how much a claim is going to cost you to start (you can reclaim for costs if you win / the bank does not defend the case). Then you can start the proceedings. But that is beyond the scope of this small writeup!
How Much Could You Be Claiming Back In Unfair Bank Fees? Background To Reclaiming Unfair Bank Charges
In brief, you can reclaim unfair bank charges you have incurred within the previous 6 years. This includes charges for being overdrawn, letters informing you about bounced cheques and failed direct debits and the likes. If the action probably only cost the bank a little amount and they have charged you a lot more, then there’s a chance of a claim. If these fees have caused you to be charged further charges or interest, then you will also have a case there.
Further to this, you can claim for interest on the amount you are claiming – the interest you would have earned on the money had it been in your account.
But how can you uncover how much the bank has charged you?
First, if you still have your bank statements for the past 6 years then you just need to flick through them. If you haven’t kept them all, if you are registered for online banking (or can register) then you may be able to determine the fees from there.
Finally, if none of these are possible then you have to approach your bank. Asking for copies of back statements can prove quite costly (and these fees DO NOT count as unfair!!!). But if you know exact dates of fees, then this might be not too expensive. But the final way is to write to the bank, quoting the Data Protection Act 1998, requesting them to tell you for all fees on the account:
• what the offence was
• the date of the offence / fee
• the amount of the charge
The bank has, by law, only 40 working days to respond. But it is allowed to charge you a fee not more than £10, so it is worth while including in this letter the full £10 fee made payable to the bank.
If your bank tries to send you a copy of your statements they can try to charge you for that. To stop this, make certain that you tell the bank you are using the Data Protection Act 1998 to get a list of all charges.
Expenses
You can also reclaim expenses incurred in making your claim, although this can be best left in case the claim gets as far as the court stage and then used as a bargaining tool to prevent that. Simply put, if the bank see that you will accept repayment now, or repayment plus costs if they don’t accept that, then there’s a financial incentive to them to accept.
Reasonable costs include court fees and a case has also included costs of preparing the case. To include this, document a record of how much time you spend preparing your case then include a charge at £9.25 per hour (the legal entitlement).
There are thousands of mortgage products available on the market today, even if the number of mortgages is rapidly decreasing in the falling economic climate. Choosing any one type of product does reduce the field of choices, but whatever you choose, you are taking a gamble.
Not one of us can say for certainty whether loan rates will hold fast, increase or decrease over the next year, let alone the next few years or the life of your next mortgage. Whatever you go for and you may not be able to afford repayments, which could cost you your house.
It is far the best idea to check your circumstances with a mortgage broker and ask him or her about what types of products should suit you and your outlook. But many of the terms can be confusing and you want to check that the advice that you are about to receive is the best and in your best interests. Mortgage brokers aren’t allowed to advise based on what mortgages or potential lenders will pay them the best commissions. But that fear should still be in the back of your mind.
Worse still, some brokers might not even be willing to advise you on what mortgages are likely to be best for you, fearing that if in a few years you don’t like the products they so diligently found for you and arranged, you might turn around and sue them. That’s how the process has left me feeling when I’ve been in that situation.
So if you are trying to find a mortgage and are about to set out on the long road of trying to compare mortgage loan rates from everything that you find suitable, what exactly is this contract that you are entering in to?
And it is just that – a contract. It’s a contract between you and the bank that they will lend you a large sum of money and that for the next however many years you will pay them back in small amounts. Don’t pay them back for too many months and the contract allows them to take your house off you, evict you from the house and sell the property as quickly as they can for whatever they can get for it. Only if the house sells for more than the remaining mortgage, plus costs incurred in this process, may you see anything for your, potentially, years of repayments. And the building society would much rather sell the house quickly and recover all of their money, than hold out for a realistic price which gives you a fair share, but might take months to achieve a sale.
As with many products and services in life, shop around for a mortgage broker and ask them which of the interest rates currently available are best for you. Fill in several forms to get mortgage brokers to contact you and see what advice they can give you and what products they have on offer. When you are finding a few sounding the same, you know you should be getting a good answer there.
For those trying to compare all mortgage rates in the current financial climate, you will be aware of just how complicated that once simple task can be. Products are constantly being dropped from the market and replaced by new mortgages and many mortgages that were available are just being dropped.
Of the 10,000 plus different type of products that were available last year, many products have fallen by the wayside and not been replaced. There is far less choice on the market and those that are out there are becoming more and more difficult to get hold of.
At the same time, many lenders are struggling to borrow the cash they need for themselves to be able to lend mortgages. Finding a mortgage is becoming increasingly more frustrating. And if you are one of the many thousands in the unlucky situation whereby you have a current mortgage deal that is about to end and you are needing to remortgage in order to save yourself from a huge rise in repayments, you may have your work cut out.
Many of the today’s mortgage interest rates out there on the market now come with many strings attached. The days have gone when there was a choice of building societies who were willing to lend you far more than the value of the home you are buying, at least for now, anyway. Instead, some of the best mortgages are only made to those homeowners who are fortunateenough to be able to put down a good sized deposit – 25% in some cases. This means that if you are after the best products, which are usually the ones shown in comparison charts, you can only be borrowing three quarters of the value of the property you are buying.
Hopefully, for many people who are looking at remortgages that isn’t too much of a problem as their house’s value has probably risen in value a lot since they first bought it. But first time buyers and those who’s house have decreased in value since purchase, might find themselves struggling for a mortgage offer.
Tie into this the woes that many building societiesare now not lending to people whom they previously would have happily leant to, and the thousands of mortgages you are viewing in a product table is vastly diminished.
But jumping through all of these hoops doesn’t need to be an awkward job for you. There are still plenty of mortgage brokers out there looking to make a living and they do that by offering their services for free and finding you the best products possible. Although it maybe seems a good idea to trawl through product tables, these days that can give you a lot of wrong answers. So get the experts to do the leg work for you!
When you are considering a new mortgage, there are a number of charges that building societies might not spell out as much as borrowers might like them to. They are always mentioned at some point and in the end may add up to quite a lot of cash. But remortage tables in their basic form wont spell them out. So when you are trying to a href=http://www.comparemortgagerates.co.uk/compare-mortgage-rates.php target=_blankcompare mortgage loan rates/a through online charts, dont forget to delve more deeply to see what hidden fees you might unearth.br /
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To understand what these fees are going to end up costing you, it is worth either asking an independent financial advisor for assistance or at the very least get a detail of what the total repayments will be, including all fees.br /
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Heres some examples that you might want to be looking out for when trawling through the mortgage tables in search of a href=http://www.comparemortgagerates.co.uk/ target=_blankinterest rates/a.br /
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Exit Fees – if you do not continue the mortgage to the end of its term and instead complete it early then the building society may try to charge you an exit charge to cover their administration costs that are involved in completing the mortgage. This may even be charged at the end of the mortgage whether it is paid off early or not. Previously these have been reasonable fees that dont really add up to much in comparison with the figures involved in a mortgage, but some building societies have hiked up these fees to try to make more money. This is taking advantage of the small print saying that fees can be increased and can result in incredible rises. br /
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Standard Variable Rate – this is the standard mortgage rate that the lender will charge you once your introductory period is up. It is normally around a couple of percentage points above the standard base rate. This is where the building societies make their cash through those customers that dont try to swap mortgages when the introductory offer finishes. If you are on the standard variable rate and the tie in period is over, then it is high time to look at those mortgage charts.br /
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Higher lending charge – long gone are the days of the 125% mortgage, or at least until the building societies forget how badly they had their fingers burnt this time around. Most of the mortgage charts show the best buy deals and have various hoops to jump through, such as not lending more than 75% of your new propertys value. If you are borrowing more than the cutoff, then the lender may charge you a higher lending charge.br /
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Early redemption charges – if you want to end your mortgage earlier than the offer or tie in period, there is usually an early redemption charge. This might be expressed as an amount of cash or so many months interest. Quite often after the tracker or fixed rate is over there is a tie in period during which you cannot change from the standard variable rate without incurring this early redemption fee.br /
If you are shortly to apply for a loan, mortgage, credit card or any other form of credit, then you might have sensibly decided that it is time to a href=http://www.comparemortgagerates.co.uk/how-to-check-credit-reports.php target=_blankreview your free credit report/a. With credit so difficult to come by at present, this certainly is a good and welcome move and could potentially avert the disaster of being refused in error.br /
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But do you know a href=http://www.comparemortgagerates.co.uk/how-to-check-credit-reports.php target=_blankhow to check credit reports easily/a and realise it is very easy and free? If you have been refused by a lender then the first step is to write to the credit reference agency that they used asking for a copy of your report. Then check the report and request any errors corrected.br /
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It is far better though to do the check before applying for the credit – close the stable door before the horse bolts! Credit reference agencies help you to check your report online and there are many companies about that will give you regular reports as things change on your credit status. Usually there is a free trial, or so much of the information is free, followed by a paid membership or payments for extra facilities.br /
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If you are just wanting to check you report in advance of taking out credit, then the free trials are usually enough. Quite quickly you can have access to your credit data and see the data that the lenders will be looking at as part of their decision calculation. Some reports will even give you an approximate indication of your credit status.br /
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On top of the report, the future lender will also use your income, which the credit report will not include. This means that it is only an approximation, but it will show you any nasty surprises, such as loans that you forgot you had missed last year.br /
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Once you have looked at and studied your credit report, you might have found slight errors in the report. In this case you should write to the lender that provided the information and ask them to amend their records. Once they have done this, they will then update your credit report.br /
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It can also be possible that there are searches recorded on your credit report you do not relate to credit requests. These are recorded whenever a potential lender refers to your report in order to decide whether to lend you money. If a few of these are not familiar to you, it is worth checking them out. If there are a number of these, or for a lot of money, then be very careful with your checking as it can be a sign of identity theft.
A lot of people are finding they are in difficulties financially at the moment and with the poor state the housing market is in at present, new problems are rearing their heads that many homeowners will not have previously cared about.br /
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With house prices crashing over the last couple of years and more falls in the future, it is certain that there are a large number of borrowers on the market for whom their house price is worth far less now than when the bought it a year or two ago. If you are one of these people and are not intending on selling your property, then you might think you are not affected, but how wrong can you be?br /
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If you need to sell your house and it is below the original buying price, then you could be in real problems as you might find the mortgage isnt covered by the sales price. In this case, you really need to speak to a good local financial advisor as soon as you can to see what options could be open to you.br /
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But back now to those people that are not planning to sell their houses and are happy to sit and wait for the housing market to recover. Here we can also include those that are having to sell, but know that the house price is still covering the mortgage and know that with the price of their next house also falling, the bridge between the two properties is less.br /
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What is the problem for these borrowers? Well many borrowers who bought a house at the peak of the property prices will have bought them with fixed mortgages. If you secured a 5-year mortgage, then you may have a few more years before you need to worry. But if you secured a very low rate with, as goes together with the best rates, a short fixed term, you might be in need of a new mortgage very soon.br /
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Two years ago, some building societies were happy to lend 125% of the house value. This is not the case any more and many lenders are punishing those borrowing more than 75% with higher interest rates. Even if you only borrowed 75% of the house s value when you bought it at its peak price, if it has lost 10% of the value so far, then your new mortgage now has to be for almost 85% of the propertys value, even though you are not borrowing a penny extra.br /
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This difference is purely because the price of your home has fallen, nothing else. But if you borrowed 90% or more, then you could now be looking at an impossible 100% mortgage at best. Many banks will now not touch you, even though they were probably clamouring for your business when you first bought your home.br /
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So what can you do? Well seeking good professional advice from a financial advisor is a lifeline. Get him to help you a href=http://www.comparemortgagerates.co.uk/ target=_blankcompare top mortgage rates/a for those products that are open to you – get him just to show you the best rate that apply to your circumstances. If you a href=http://www.comparemortgagerates.co.uk/ target=_blankcompare all mortgage rates/a and none are affordable, then ask for other options from him. Extending the loan can be costly in the long term, but you may be able to move other finances around.br /
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Whatever you do, it is always worth starting to look early, rather than leaving it to the last minute. You can always swap to a better deal later, but if the search takes too long, you could be out of time if you keep putting off the dreaded deed.
Many people are watching their current mortgage deals coming to an end and are thinking about moving to a new mortgage to save cash. But is it always the case that a lower rate mortgage is cheaper in the long run?br /
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On the face of it, if you can reduce your monthly mortgage costs by 0.5% then you could be saving yourself a lot of monthly expense. This could be a reduction that you can spend elsewhere or if you are unlucky and expecting a huge rise in mortgage costs, just a reduction in the increase of the monthly cost.br /
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Using mortgage comparison charts tell you what mortgage is the cheapest on the market right now, but is it available for you? More importantly, will it actually reduce your outgoings in the long term?br /
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Although interest rates have crashed at the moment and are expected to continue this way for some months, some experts believe a reduction is on the cards in the short term. So if you lock into a 2-year, 3-year or longer a href=http://www.comparemortgagerates.co.uk target=_blankfixed term mortgage/a, by the end of the term you might be paying more than a variable mortgage if you had stuck it out.br /
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On the other hand, we may be surprised by a recovery and interest rate rises and then you would be better off. Thats the nature of this game. But this isnt the only area in which you could be spending a lot more than you need to.br /
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Look carefully at those best remortgage offers that you see in mortgage charts and read the small print. Look for the upfront fees – arrangement fees, legal fees etc. Take a look at your existing mortgage, how much is involved in closing that? There may be exit and deed release fees. These fees may also exist in the new mortgage – are they significantly higher than the current mortgage – thats effectively a cost in the future?br /
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When you look at these fees, how much will you be paying to switch your mortgage? Many banks allow you to add this to the borrowing, but then you are paying additionl interest on them for the duration of the mortgage. Even more outgoings each month!br /
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If you can afford to pay these fees at the time of the move then in the long term that way is going to be cheaper. But then look at your existing mortgage. If you are having to pay £2,000, maybe even more to switch mortgage, could you instead pay off a small chunk of the mortgage, or at least put that cash away in a high interest account instead? Then take a look at how that would offset your payments – or work out what your net payments are after the money put aside earns some interest.br /
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Changing to a new bank may not always be the right thing to do. First, speak to your building society and see what monthly charges they can get you down to with your existing mortgage. Then, instead of relying on tables to a href=http://www.comparemortgagerates.co.uk target=_blanktry to compare mortgage rates/a, speak to a few mortgage brokers and get them to do all of the maths for you and write down exactly what you will be left paying each month.
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