Many borrowers in the UK are currently benefiting from a concerted effort to jumpstart the housing market. Walking down the average British high street, it’s plain to see that certain mortgage lenders are doing their upmost to draw in potential customers.
Some lenders are increasing their maximum loan-to-value ratio threshold that will allow borrowers to qualify for their best rates. For example, some are raising their LTV ratio from 65 per cent to 70 per cent, which in turn facilitates a reduction in their interest rates. As an added incentive, there are also lenders aiming to cut their arrangement fee for all of their customers making residential purchases. This will not be extended to existing clients looking to remortgage though. Instead, perhaps feeling that these clients are limited in their options, no further encouragements are on offer. This might be to do with the levels of equity that these borrowers have in their home.
Secured loans, amongst which remortgaging is counted, can offer better rates of interest than unsecured loans. This is because they use your home as collateral and as the lender is facing less risk with your house as guarantee of repayment, they can afford to offer you a lower interest rate. If you are considering this option from the perspective of debt consolidation, a secured loan can also allow you to repay the debt over a longer term. It’s worth remembering that there are a lot of lenders that specialise in this area, so shop around. Also be aware that failure to make payments to your secured loan means that your home is at risk of repossession. Speak to specialist debt or loan advisor to help ensure that you are on the best course of action to suit your circumstances.
If you are planning to buy property as an investment, coming off the back of a period of such little competition in the buy-to-let market, it is an encouraging sign to see such substantial reductions.
Also, tracker mortgages are becoming more and more popular with consumers. This could be due to economists’ predictions that the Bank of England base rate will remain at the present low rate for longer than had previously been thought. Trackers can also generally offer a lower rate than a fixed rate deal would be able to at the moment.