I know that I normally spend a lot of time drawing your attention to reasons as to why you should consider re-mortgaging. This week I thought I will take a different tack and help you consider why you should stick to your current mortgage deal. So, here are five situations in which I would recommend that you stick your current mortgage deal:
- Your mortgage debt is really small: once your loan falls below a certain amount – say around £50,000 – it may not be worth switching lender simply because you are less likely to make a saving if the fees are high. The smaller your mortgage, the worse the effect of any fees you need to pay. Quite often, you’ll be better remaining on the higher interest rate.
- Your circumstances have changed: for example, one of you has stopped working or you have become self-employed. Stricter mortgage rules introduced in April 2014 mean lenders have to see evidence of your income. New lenders may not be prepared to offer you a loan because you no longer fit their criteria, meaning you may have to stay where you are.
- Your home’s value has dropped: you may have had a 10% deposit when you bought your home and got a decent mortgage, borrowing the remaining 90% of your home’s value. But now, your house price has dropped and the amount you owe is a bigger proportion. In some cases, you may be in negative equity, where your debt is higher than the value of the property. The only thing you can do is sit tight, make overpayments whenever you can afford it as long as you won’t be charged fees as well, and wait for prices in your area to go up again.
- You’ve had credit problems since taking out your last mortgage: since the credit crunch, lenders have become much more choosey about who they lend to. As a result, lenders will want a lot of detail about your outgoings, and are looking for spotless repayment histories or at least a good, clean record of handling debts well. It might only take one recently missed payment to your credit card, loan, mortgage, utility company or your mobile phone to alter your chances.
- You’re already on a great rate: You may be already on such a fantastic deal that you’d be mad to move. But don’t get too comfortable – chances are it won’t always be top of the tree so eventually you’ll need to consider re-mortgaging.
Whilst some of these circumstances will make a difference to your chances of finding a better deal it is always worth keeping an eye on the market and getting advice from a broker who can find the best deals to fit your circumstances.
So if you are just checking for peace of mind or indeed in need to get a new mortgage deal get in touch for an initial chat and review of your circumstances.
Your property may be repossessed if you do not keep up repayments on your mortgage.