Despite all the doom and gloom surrounding the mortgage market, record low interest rates mean homeowners can still save a tidy sum by making sure they are getting the best deal.
The question of whether or not to remortgage once your current deal came to an end used to be simple. Homeowners who stayed on their lenders’ standard variable rate (SVR) for any longer than it took to arrange a new deal were generally viewed as being apathetic at best, if not just plain bonkers.
But times have changed, and one of the peculiar quirks of the credit crunch is that in many cases, lenders’ SVRs are now more competitive than the new mortgage deals on offer.
The high deposits that lenders now demand have further muddied the waters. Two years ago, homeowners needed deposits of just 5% to 10% to qualify for the best deals: today that has soared to 40% (though lower deposit mortgages are starting to creep back into the market, with several competitive deals now available asking for 25% up front).
At the same time, however, falling house prices have eroded the equity stake that people have in their properties, making them less likely to qualify for one of the top deals. For example, if you have a £160,000 mortgage on a property bought last year for £200,000, at the time of buying you owned 20% of the home and the lender owned 80%. However, if the home is today worth £170,000, you now own just under 6% of the property – and are therefore likely to be disqualified from the pick of the mortgage deals.
How to get a good mortgage deal
Rest assured, there are still good rates out there, and, armed with the right facts, homeowners can easily navigate the remortgage maze to decide if they would be better off taking out a new loan. Someone with a £150,000 mortgage, for example, could save nearly £230 a month by switching from one of the least competitive SVRs to one of the current best-buy rates.
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