In this final part of our guide, we look at what you can do if you're buying or looking to remortgage and want to minimise the effects of the credit crunch
What Can I Do?
Borrowers looking to remortgage, need to start their search early. In more stable times we would recommend a 3 month lead in time, but in these uncertain times, 4-5 months may be more prudent. Any longer and you run the risk that you could miss any completion deadline, or go past the normal 6 month validity of your mortgage offer, before being in a position to complete.
If it is important to start your search early, it is even more important to act quickly once you have found the scheme you want as lenders are withdrawing products daily, often without any notice period.
In this difficult climate lenders have started to withdraw products from higher risk areas, and this includes lending a high percentage of the property value, where we have seen the demise of 100% mortgages and some lenders now restricting lending to 90%.
To avoid falling foul of this reduction when you remortgage, try to overpay where possible, especially if you are close to a lending threshold, over which interest rates may be higher or simply unavailable. Key thresholds are 95%, 90% and 75%, but there will be others.
Maintain a good credit profile. Try and clear any personal debt such as credit cards and loans as they can affect the amount of mortgage you can borrow. Most importantly make sure you don’t miss any payments, or are late sending them. Setting up a direct debit for the minimum amount will at least ensure that you don’t forget. You can then look to make additional payments whenever it’s convenient.
For those looking to move, or buy their first home, then the same principle applies. Put as much deposit into the purchase as you can, again paying attention to lending thresholds.
Shop around the whole market to ensure you get the best deal. If you need help, go to a whole of market broker, but don’t pay a fee for the advice.
Once you have found the right mortgage, ask your broker or the lender whether it is in your interest to get an agreement in principle to ensure you meet the lenders criteria.
Where you have the option, don’t pay any lender arrangement fees up front. Elect to pay them on completion, so you will not be out of pocket if the purchase doesn’t go through.
While it is certain that these are testing times, with the fall in bank base rate not spawning as many cheaper mortgage rates as expected, there are still competitive deals to be had, but you will need to be quick to secure one.