Whilst the effects of the global credit crunch plays havoc with the UK housing market, many people are struggling to find suitable mortgages. The problem is the same for a whole range of people from first time buyers to those who are looking to remortgage.

Many would think that first time buyers might welcome the effects that the credit crunch is having on the housing market as it is bringing the prices down after years of steady rises. However whilst some properties are becoming more affordable, finding a mortgage that is affordable is more difficult. First time buyers have less choice nowadays when it comes to mortgage providers due to many lenders withdrawing products from the market. The products that are still available often have high rates of interests as well as steep arrangement fees. In addition they are now only available for smaller amounts, meaning that some areas will still be out of reach for first time buyers.

On the other hand, those who already have mortgages are also suffering. Many people who secured themselves cheap two year rates before the credit crunch are now finding that they are due to expire and similar deals are no longer available. In addition thousands of homeowners have found themselves in negative equity after the price of homes has dropped below what they originally paid for the property. Statistics for the UK show that there was a 2.5 percent decrease in house prices during May which is the largest drop in one month since records began in 1991.  Since last October the average drop in house prices has reached £12,500.  Predictions for the future look bleak with experts stating that they believe house prises in the UK will drop by an average of twenty percent over the next two years.  If this is the case, then it is predicted that around two million homeowners could end up with negative equity.

Negative equity is not necessarily a bad thing if people are planning on staying in their current homes for considerable time; as trends in the housing market have shown that prices typically do recover over time. However for those people who are looking to move or need to remortgage during this time then things become a little more difficult.  It is estimated that over 1.5 million people will need to remortgage this year and finding a good deal is a tricky business. Those who need to remortgage for more than their house is currently worth will find that the deals will be even less competitive and in some cases they will have no other option but to remain with their current lenders variable rate which is often a lot higher. 

Overall predictions for the housing market over the next two years are looking bleak which is encouraging more people to stay put in order to ride it out. There are also fewer buyers as consumer confidence in the market plummets. Those who do need to sell will find they have to lower their prices quite substantially to entice the buyers in; whilst those who do want to stay will find it harder to find competitive mortgage deals. We will just have to wait to see what the future holds.

If you currently have a mortgage and you want to get a better interest rate with a different lender, then you can consider a remortgage. Many people are looking into this because it is a way for them to save money on their monthly payments and overall. Of course, there are some steps you need to consider when it comes to remortgages.

Not everyone knows all the details and don’t end up getting the best deal because of it. The following guidelines will help you make the best decision for you when it comes to determining whether a remortgage is in your best interest, or your current mortgage.

Ways To Get The Best Deal

It is important to know that you can remortgage as often as you want. However, this rarely makes good financial sense so that is why most people do not do it. In some cases, a remortgage makes good financial sense.

However, this is not always the case so you need to do research to determine what will work best for your situation. Remortgages usually cost money, even if they can save you money in the long run, so it does make sense to do in this case.

However, remortgage after remortgage does not make sense because you will end up spending more in fees than makes sense. Because of this you will want to do some research before you ever make a decision so that you know you are going with the very best lender for you.

You don’t want to change again in the future, so make sure you find the right lender this time around. You may be going through a remortgage because you didn’t pay close attention the first time around and ended up with a lender that was not in your best interest. So, when looking for a remortgage do your best to do research and make the best decision for you.

One thing to look at is arrangement fees. Each lender has these and they vary greatly. When you find a lender you really like feel free to try and negotiate fees with them. They want your business and may be able to help you out a little bit to keep your business.

Also, always read the agreement before you sign. Just because you vocally agreed to one thing does not mean that the contract says the same thing. That means you need to take the time to sit down and read through the entire contract. This is in your best interest so make sure you do it.

Some remortgages also have early pay off charges. These fees are associated with a home loan that you pay off early. You will want to make sure you are aware of what these fees are and negotiate them to meet your best interest.

Finally, keep in mind that remortgages come in many shapes and sizes. It may take you a little research to find the right one for you, but if you put in the effort it will pay off and save you money in the long run!

UK mortgage fees have risen considerably in the past few years despite low interest rates and high levels of mortgage market competitiveness. The rising UK mortgage costs include both the fees applied to the mortgage upon application and upon redemption.

The cost of applying for a UK mortgage has risen considerably in the past three years alone – in addition to a steady increase prior to this period. The hike in application fees has occurred despite UK mortgage lenders cashing in on increased earnings via interest collected thanks to soaring property prices and increasing average mortgage balances.

In addition to the increase in UK mortgage arrangement fees, the cost of exiting a mortgage has risen considerably within the same three year period.

The cost of redeeming a UK mortgage during a fixed interest rate period can be as high as 5% of the balance of the mortgage. A UK mortgage that is redeemed without an early repayment charge can still cost the borrower several hundred pounds, particularly if there is a remortgage involved.

A more competitive UK mortgage market has seen home owners benefit from an interest rate war, however, this has not translates into lower mortgage fees.

Because fees now comprise a significant expense to borrowers it is important to include them in any mortgage comparison when assessing which UK mortgage is the best for their particular circumstances. It is no longer good enough to simply compare the headline interest rate.

The true cost of a UK mortgage is demonstrated by the Annual Percentage Rate (APR). The APR presents a truer representation of the true cost of a UK mortgage than the headline interest rate meaning that the lower the APR, the more cost-effective the mortgage is.

However, it is still not good enough to base a decision solely on comparing APRs of competing UK mortgage products. Other factors, such as the service levels of the lender and the flexibility of the UK mortgage, should also be taken into account.

Selecting the right UK mortgage can be a confusing task so it is a good idea to speak to an independent mortgage broker for impartial advice if required. An independent mortgage broker will have specialist software that can scan the entire UK mortgage market to help select the right UK mortgage product to suit an individual’s personal financial circumstances.