London Remortgage

It appears that rising interest rates have had little impact on the UK housing market as the Association of British Bankers have revealed that mortgage lending in July 2007 increased by £13.6 billion. The figure is almost exactly in line with the preceding six-month average of £13.7 billion and represents a slight increase on the June rise of £13.1 billion.

The July increase is not what the organisation expected with BBA statistics director David Dooks admitting that the rise was ‘surprising’ following the cumulative affect of the recent interest rate rises. He added: “Steady growth in lending on UK mortgages in spite of five interest rate rises highlights the popularity of home ownership”, but Dooks also pointed out that much of the total advanced figure could be down to re-mortgaging activity as homeowners seal fixed rate deals to minimise the impact of the interest rate rises.

Those five rises over the last year have led many homeowners currently on due-to-expire fixed rate deals to frantically compare mortgages currently available in the market in an effort to find one that will alleviate the rate increases. Homeowners with a mortgage of £100,000 currently on fixed rate deals obtained two years ago could face a monthly increase in the region of £200 per month if they were to move to the variable standard rate; so the need to find a discounted or fixed rate remortgage is proving fairly critical for many families. That immediate need is what most experts believe are driving the current mortgage boom.

The Council of Mortgage Lending (CML) recently announced that total gross mortgage lending reached a new record for the month of July amounting to £34.4 billion, reflecting the trend highlighted in the BBA figures. The CML readily admit that they attribute market buoyancy to the remortgage effect and don’t expect autumn figures to be so high. Despite that, the CML are still predicting a record £360billion of mortgage lending for the year ended 2007. That will be due in part at least to the fact that more and more fixed-rate mortgages are due to revert to standard variable rate in the coming months.

However, the Royal Institute of Surveyors (RICS) has pointed out that the recent volatility in world markets, including the collapse of the sub-prime market in the USA, will lead to more expensive fixed rate deals, and that will impact on household finances. Chief economist for the organisation Simon Rubinsohn warned: “With 90% of borrowers currently opting for fixed rate deals, those who already find themselves financially stretched will be paying an even higher price for their peace of mind.”

So, even though mortgage lending is still at record levels it is primarily because of homeowners seeking new fixed rate remortgage deals. It appears that the interest rate rises designed to slow the economy are having the desired effect, even if it taking time to work its way through the system.

1. Save money by paying less interest.

Your mortgage is probably your largest debt, so you want to get the best interest rate possible. Interest rates may have gone down since you first purchased your home. You may have improved your credit rating. You may have improved you income enough to qualify for a lower interest rate. A lower interest rate reduces your monthly payment amount. It can also be used to shorten the term of your loan.

2. Get cash for home improvements, university fees, or other needs.

Need cash for home improvements, to start or expand a business, or to pay off credit card, car, or other non-deductible loans? If your home has increased in value, you can use a re mortgage to get extra cash.

You could increase your loan amount, giving you cash that you can use any way you want. And since your interest rate is lower, your monthly payments often stay the same – or may even drop, depending on how much cash you get out.

3. Consolidate high-interest debts into a new home loan.

Credit card debt, car loans, bank loans – if you have high-interest debts, you can consolidate them into your mortgage payment when you re mortgage. The advantage of consolidating your debts into your home mortgage is that not only are your interest payments lower, but they are also tax deductible.

4. Adjust your mortgage term.

When you re mortgage your home, you can take the opportunity to change your mortgage term. Maybe you originally took out a 15-year mortgage, but want to re mortgage to a longer loan term so you can have more cash each month. Or maybe you want to reduce your mortgage term from 30 years to 15 or even 10 years, and get your mortgage paid off more quickly.

5. Change your type of mortgage.

One of the biggest reasons for re mortgaging is to switch from a fixed-rate loan to a variable-rate loan or to switch from a variable-rate loan to a fixed-rate. (With a fixed-rate loan, your mortgage payments are always the same, while with a variable one, they vary over time.)

If you plan to stay in your home for five years or less, you can save money by re mortgaging to a variable-rate loan, because interest rates usually start out lower for these loans. On the other hand, if you already have a variable-rate loan and the interest is higher than the current fixed-loan rate, it can save money to re mortgage with a fixed-loan rate.

6. Eliminate private mortgage insurance.

Are you paying money every month for private mortgage insurance to cover your mortgage payments should you become redundant, have health problems, or are otherwise unable to make your mortgage payments?

The sooner your mortgage is paid off, the sooner you can save that money. Re mortgaging to a shorter term means you get your mortgage paid off sooner and can drop your private mortgage insurance.

Article Source: http://EzineArticles.com/?expert=T._O’_Donnell

The best remortgage for a home owner is one with a low interest rate. The key to choosing the best remortgage is simply comparing the interest rates of different lenders. However, being the position of remortgaging a home owner has an advantage. They can negotiate with their lender to get a good deal.

The first part of negotiation for the best remortgage is getting a starting idea from the current lender. The home owner should discuss their remortgage options with their lender and ask what they have to offer. At this point the home owner tells the lender thanks for the quote and then starts to shop around.

The home owner should look at various other lenders and gather quotes for their best remortgage. They are looking for the lowest quote, preferably lower then their current lender. Once they have found the lowest rate possible they are going to go back to their current lender.

At this point the home owner has the upper hand. Their lender does not want to lose their business and they know the only way to keep it is to match or beat the lowest quote they got. They understand the home owner is only trying to save money. At the same time, they are trying to make money, so it can take some hassle.

The lender may offer other deals, so it is important that the home owner makes it clear that the deal breaker is the interest rate. As long as the other quotes follow the same general lines of the original mortgage this is the best step.

However, if the other quotes tack of fees or other costs then the lender will grab onto that and try to win the deal that way. That is why it is important to get quotes that are exactly the same as what the home owner is trying to negotiate with the current lender.

During the negotiations the lender will either cave and give the home owner the interest rate he wants or they will say they can not do it. If they agree then the remortgage can proceed. However, if they can not meet the lowest rate then the home owner needs to go to that lender to start the remortgage process.

Getting the best remortgage is all in the hands of the home owner. Lenders are not going to jump at the chance to provide rock bottom interest rates at first. By negotiating and shopping around, though, the home owner gets the upper hand and they can force their current lender into going with a lower rate.

The reason this works is because the current lender does not want to lose the home owners business. However, other lenders are more than willing to offer low rate to gain the home owners business.

Staying with the original lender, though, has its perks. It enables the process to be much quicker and easier. Plus the home owner already has an established relationship with this lender. However, in the end the only thing that really matters is saving money and getting the best remortgage rate.

Dynamix Outsourcing is a Remortgage Advisor from London, England. He runs the Remortgage department at http://londonremortgages.info who try and find clients the best remortgage deals on the market.