Mortgages London | Mortgages in London

Posts Tagged ‘Remortgages London’

Industry insiders are hinting that homeowners should consider fixed rates remortgages for their London homes. This follows an announcement made by the Prime Minister last week that highlighted growing concerns over rising inflation and imminent changes in interest rates to control the impact rises may have on the economy.

As competition within the mortgage market increases, there are now some incredibly competitive fixed rate deals available that actually give variable rate mortgages a run for their money, but these may not be around for long. Mortgage advisors are therefore suggesting that Londoners remortgage soon to secure a low interest fixed rate mortgage before inflation pushed interest rates up again.

There are a couple more reasons why the time is right to choose fixed rate remortgages. One is the recent rise in house prices. With most homes in London now worth much more than they were a couple of years ago – having risen by as much as 10% over the past year – homeowners have increased their equity which means it is possible to access a lower LTV deal at a much more competitive rate than is usually associated with fixed rate.

The other reason comes with yet another announcement about the future of the country’s economy. The Organisation for Economic Cooperation and Development (OECD) warned that the Bank of England will need to increase the base rate, which is currently at an all time low of 0.5%, by December to keep inflation under control. This will of course mean that mortgage rates will rise accordingly.

Some of the best fixed rate remortgages available at the moment are for long term deals. Five year fixed rate mortgages from Britannia are now under the 4% threshold, and Nationwide has reduced interest rates on five year fixed rate deals by 0.23%. The fact that there are now 372 more five year options available than there were three years ago is also a timely reflection of the current situation.

There is a chance for some homeowners to access heavily discounted remortgages from London based Toscafund, which could potentially knock off as much as a fifth off the value of an existing mortgage debt. The incentive will not only reduce the cost of a loan for borrowers, it will bag the new lender substantial profits and help bolster the housing market at the same time.

The Government has focused on encouraging banks and building societies to offer mortgage packages to UK residents in a bid to support and help the recovery of the property market as well as boost the economic recovery of the country. The new remortgage incentive is set to do just that. The hedge fund has acquired existing mortgage portfolios from several international lenders at a value far less than the worth of the debt, and if it can persuade the mortgage holders to remortgage, they will be able to make a profit.

An undisclosed UK lender will soon be notifying anyone who is eligible about the deal offering them a chance to switch to another mortgage provider and reduce their current debt by between 15% and 20%. The offer will only be offered to those who are up to date with their payments with their current lender. The company spent approximately £255 million buying the portfolios; to yield a significant return on this investment it is thought that the company will need to persuade around 70% of homeowners to refinance with another lender.

These remortgages will be available to eligible UK candidates until late summer and are thought to be a welcome offer at a time when many homeowners can take advantage of the current low interest rates through remortgaging. It is thought that thousands of homeowners could benefit from the opportunity.

London properties are becoming more valuable as the economic crisis lessens and the housing market picks up, which has prompted an increase in applications for remortgages. London brokers say that residents are remortgaging for two reasons, to take advantage of low interest rates, and to free up equity locked in the property. Deciding to stay with a current lender once the initial term has expired could mean that you will be paying over the odds, but unless you have sufficient funds, it is possible that you may not even have the option of remortgaging.

Most lenders require a minimum of 20% deposit, and if your property has not gained in value by this amount since you took out a mortgage, and you do not have the money available, a remortgage application will be declined. In addition to finding a sufficient deposit, it is probable that you will need to pay a handling fee in the region of £1000. There are several brokers who have a fee free remortgages at the moment, but these sometimes come with less favourable repayment options.

If you manage to secure the right amount of money for a deposit and arrangement fee, there is still no guarantee that you will save money with a new deal. Remortgages are ideal for anyone who obtained a mortgage with high interest rates and can now change to a deal with lower interest, but if your last mortgage was based on a larger LTV than currently available or took advantage of low interest rates, monthly repayments could actually increase.

It is not always necessary to wait until your current mortgage deal has come to an end. If you believe that your property has increased enough in value, or that interest rates have changed significantly, it may be worth remortgaging early. This usually comes with an early redemption charge, which varies considerably depending on whether the initial term was two, three or five years and how much deposit you initially put down.

London mortgage advisors to say that homeowners should check their deal on an annual basis and shop around to see if a better mortgage is available as remortgages can save money under the right circumstances.

The number of remortgages in London account for over fifty per cent of applications in the market. The rise is said to be driven by an increase in buy-to-let ventures, a stark contrast to the remortgaging days before house prices began to drop. When properties were more or less guaranteed to yield a favourable return on investment and continue to increase in value, many homeowners cashed in to fund luxurious living.

Home improvements and holidays were among the top reasons for a remortgage, whereas today, with both the markets and the borrower more cautious, such frivolous applications are non-existent. Instead, borrowers are showing that they want to be wise with their money, and therefore investment is considered the best way forward, and what better place to invest in property than in London.

London is the UK capital, and it has maintained it’s popularity through cultural diversity. London offers visitors and residents a wide selection of activities, sights, amenities and stunning scenery in a diverse range of locations. There are very few cities around the world that could be said to offer as much, and that is why investing in a property here is a popular option for people who have a chance to remortgage.

Remortgages can be used to purchase a buy-to-let property by using an existing property as security. This is particularly desirable for homeowners who are coming to the end of a mortgage agreement. A buy-to-let property is a great way to invest money in a property and secure some extra income at the same time. One of the reasons behind the sharp increase over the last few months may be to do with the difficulties first time buyers are facing.

It is harder than ever for new borrowers to secure loans, and there have been a notable number of mortgage applications that have been refused, despite the customer having a good credit rating. As such, demand for rental properties have risen. Many of the new developments in London were built with first time buyers in mind, but with a lack of people with a mortgage deal, it has been up to those who are in a position to remortgage to purchase such properties to make the move.

The benefit of this however is that homeowners are able to get a better deal on an existing mortgages and have a chance to invest in a property market that is making a recovery, albeit slowly. With London being at the centre of the economic recovery, it makes more sense that ever to invest in property in an area that is almost guaranteed to return to its former real estate glory.