Remortgage thoughts, London Mortgage Advice Friday, 27th November 2009

The process of re-mortgaging deals with paying off an existing mortgage and changing to a different lender that who is offering a more competitive rate or better terms.

This should therefore provide a better deal to the borrower.

However, it has become harder for borrowers because over the past two years, property prices have stopped rising and started falling, mortgage finance has dried up, and higher loan to value mortgages have gone.

Now,lenders are asking for deposits of 25-30% to secure the best deals.

And lenders are being extremely picky about which borrowers they will lend to. It is important to check your credit score and if it is poor then you need to start taking steps to improve it

Your credit report is a crucial part of the lenders' decision-making processes, and poor credit scores are the biggest cause of rejected applications.

No one is safe and an agreement in principle before a full application is made is sensible. Any missed missed payment on your credit cards or unsecured personal loans, then this will have left a footprint on your credit history, which will be picked up by lenders. However there are plenty of homeowners who have owned their properties for a number of years, and therefore despite the price drops in the past 12-18 months, are still likely to have built up a significant amount of equity in their homes.

These are the ones who are in a great position to re-mortgage and take advantage of some very attractive fixed and tracker deals out there at the moment.

With interest rates so low, a borrower may actually find that their lender's SVR is cheaper than the rate they are currently on.

However, interest rates are bound to go up and when thy do you may not be able to get such a good fixed rate at that time.

There lies the dilemma for all those in this position right now.