Re-Mortgaging Costs Can Heap Up

by Mark Johnston

A mortgage can be most home owners biggest expenditure, cutting its cost can therefore be the biggest single money saving activity.

Although re-mortgaging can save heaps of money in the long term, in the short term it is not with out its costs. Pressure to keep headline rates low has meant that many lenders have increased the fee they charge borrowers to move to new deals.

Re-mortgaging is the process of moving an existing mortgage from one lender to another. Some of the reasons for borrowers to do this are wanting a cheaper mortgage deal, to release equity tied up in the property or to add some unsecured debts to the mortgage and pay them off in that way.

With the property market still struggling and looking to carry on in this way for some time to come, anyone considering re-mortgaging should think carefully before making a decision.

However re-mortgaging can be particularly important if a home owner has come to the end of a fixed rate period or if a discounted deal has come to an end. While they can stay with their existing mortgage provider, the home owner will usually find that their rate will revert to the lenders standard variable rate (SVR) and this may not be the best deal around.

Being able to re-mortgage a property is not a given and there are several things a lender will take in to account before deciding to offer a mortgage. Firstly they will look at the borrower’s repayment history to see if any payments have been missed and secondly they will also re-assess the borrower’s income in case it has fallen or risen. All of these factors will help the lender decide if the home owner is suitable for a re-mortgage and if so what the best rate available to them is.

Recent reports have shown that re-mortgages are currently at very low rates, home owners therefore currently have the opportunity to re-mortgage at cheap rates, and this is because lenders became competitive when the demand for re-mortgaging fell. Many deals have now become more and more attractive from the home owners point of view as lenders compete for business.

Experts have warned however that these cheap mortgage deals will not last forever, when the cheap deals will actually end is currently unknown.

Lenders, especially those with the cheapest re-mortgage offers can and will remove them when enough people have shown and interest and replace them with less competitive offers. When this does happen there is not a thing a home owner can do but ‘kiss’ goodbye to the missed opportunities.

Millions of home owners are at a great risk at the moment of seeing their interest rates climb if the economic crisis continues in the euro zone. Lenders are already starting to show signs of becoming more cautious.

With the euro zone crisis high on financial agendas many financial experts are advising those looking to re-mortgage to do so sooner



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