Re-mortgagingthe way to go?

By: Michael Challiner
Banks, building societies and mortgage brokers are always on the look-out for opportunities for more business, so what is the consumer to expect in the way of mortgage types and offers?Re-mortgaging seems to be the buzz-word and this seems to be a sector of the mortgage market that’s attracting lots of interest. The Council of Mortgage Lenders report that re-mortgage applications rose from 83,000 to 93,000 in just one month, accounting for over a third of the total mortgage market.

Whilst house price rises are comparatively benign, compared with the last few years, the latest figures from the Halifax indicate a rise of 2%. Any increase in the cost of house purchase normally results in re-mortgage activity. The decision to renovate or improve their present home rather than go to all the expense of moving is often made by people who don’t actually need to change the area in which they live.

Re-mortgaging is important to owners of buy-to-let property. Apart from being able to raise funds to improve and repair their premises, especially if unexpectedly large and expensive problems crop up, there is always the opportunity of expanding their portfolio of properties. There is the deposit to raise and legal fees to consider and raising the money on a property already mortgaged is a simple way to do this.

Many lenders offer a fee-free re-mortgage service and make no charge for a valuation of the property. In standard, straightforward cases legal costs may be covered too.

Lenders recognize that borrowers are starting to look towards a longer term product. Stable interest rates may well mean more customers are looking further ahead, rather than just going for the two year fixed rate deal, with an immediate switch at the end of the period to another, hopefully similar, deal.

The Bank of Scotland are one of the banks offering three-year rates to buy-to-let borrowers and those with self-certification portfolios and the large, expensive property buyer, purchasing properties worth ?5000,000 and over.

There have been signs that the standard variable rates may increase, as indicated by the Bank of England. If this does happen, the number of people choosing to re-mortgage to get a better deal may not be as great, but this is not seen as a major problem as it is thought that the market will remain buoyant due to other factors.

Flexible mortgages are seen as being likely to attract interest, especially relating to self-employed people. These types of loan offer the option to under and over-pay, and therefore give borrowers more control over their mortgage and ways of balancing their accounts. Mortgage interest can by reduced by using capital earmarked for paying tax or maybe VAT until the bills are actually due.

Lenders are conscious of the need to meet the ever-changing requirements of their customers. They are also very aware that service is all-important. From the first time buyer, through the needs of a self-employed individual to the owner of a ?1million plus buy-to-let investor, all require individual attention coupled with the experience of a team of experts in their own fields.

Brokers work as intermediaries between lenders and borrowers and their need for contact with someone who knows exactly what the position on any mortgage is at any given time is most important. This is something that lenders recognise. Over 90% of applications are processed on-line, improving speed and efficiency and offering instant communication.

Re-mortgaging seems to be the main section of the market and in the interests of your mortgage and their business it looks as though it’s going to stay that way.

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