Discover More About You Don’t Have To Stick At Being Trapped In A Mortgage Because Of Falling House Prices
Many mortgage holders are realising they are struggling financially at the moment and with the falling state the housing market is in at present, new problems are rearing their heads that many people will not have previously thought of.
With house prices tumbling over the last couple of years and more falls on the horizon, it is certain that there are a large number of people on the market for whom their house price is worth far less now than when the bought it a year or two ago. If you are one of these people and are not intending on selling your house, then you might think you are not affected, but how wrong can you be?
If you have to sell your home and it is worth less the original buying price, then you could be in real difficulties as you might find the mortgage isn’t covered by the sales price. In this case, you really should speak to a good local financial advisor as soon as you can to investigate what options could be open to you.
But back now to those people that are not planning to sell their houses and are happy to sit and wait for the housing market to recover. Here we can also include those that are wanting to sell, but know that the house price is still covering the mortgage and allow for the fact that that with the price of their next house also falling, the bridge between the two homes is less.
What is the problem for these people? Well many people who bought a house at the peak of the house prices will have bought them with fixed mortgages. If you secured a 5-year mortgage, then you may have a few more years before you need to worry. But if you secured a very low rate with, as goes along with the best rates, a short fixed term, you might be in need of a new mortgage very soon.
Two years ago, some lenders were happy to lend 125% of the house value. This is not the case any more and many lenders are punishing those borrowing more than 75% with higher interest rates. Even if you only borrowed 75% of the property ’s value when you bought it at its peak price, if it has lost 10% of the value so far, then your remortgage now has to be for almost 85% of the home’s value, even though you are not borrowing a penny extra.
This difference is purely because the price of your home has fallen, nothing else. But if you borrowed 90% or more, then you could now be looking at an impossible 100% remortgage at best. Many lenders will now not touch you, even though they were probably clamouring for your business when you first bought your home.
Where can you go? Well seeking good professional advice from a financial advisor is very useful. Get him to help you find how to compare mortgage rates for those products that are open to you – get him just to show you the best rate that apply to your circumstances. If you find out how to compare remortgage rates and none are affordable, then ask for other options from him. Extending the loan can be costly in the long term, but you may be able to move other finances around.
Whatever you do, it is always worth starting to look early, rather than leaving it to the last minute. You can always swap to a better deal later, but if the search takes too long, you could be out of time if you keep putting off the dreaded deed.
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