2012 could be the year when more homeowners seek out remortgages as a way to manage their finances. It was hoped that mortgage rates would come down after the cut in interest rates, but homeowners have been disappointed by the fact the Bank of England only cut interest rates by a quarter of a point in December 07. Finding a more competitive mortgage or remortgaging to release equity is one way of dealing with overstretched finances.
Remortgages set to increase
As well as mortgages, those with saving accounts have suffered as saving rates have been cut for a second time. It seems whether you are saving or borrowing it’s a no-win situation. The mortgage squeeze has been discussed for months, as experts predict increasing repossessions as affordability is put to the test as fixed rate mortgage contracts come to an end. Lenders have raised their mark-ups on new mortgage products and have in general increased the deposit lenders need to get a new mortgage. But about 1.2m people are expecting to opt for remortgages in 2008.
Remortgages pay off debt
Remortgages are popular ways of switching products to get better rates, whether on new homes in Bristol or old cottages in the Cotswalds. Brokers are still predicting rates could fall so it’s worth thinking about remortgages and keeping an eye on competitive products. Remortgages can also be crucial in helping those struggling in the credit crunch to pay off debts. A high profile news story is that of the Lawlor family who have to remortgage their multi-million pound home to pay creditors massive debts. Liam Lawlor was a business tycoon who it was thought made a fortune from property before his death as a result of a car crash in Moscow last October. It seems his finances were not as abundant as thought. Remortgages offer a way to release equity without being forced to sell because of escalating deb. The pressures of debt during the credit crunch means remortgages offer much needed financial buffers for all social classes in society.
Credit or negative equity – the remortgage risk
Remortgages are only profitable however if the house in question has risen in value. Luckily, many homeowners who bought early have benefited massively from the property boom of the last decade. This means they have a financial buffer in their bricks and mortar if they are struggling with debt, but it could also spell bad news for those homeowners whose homes devalue and may even lose money in the predicted, up-coming recession.