Countries worldwide mortgage refinancing facing a recession, and the UK is no exception. The Bank of England has already cut base interest rates mortgage refinancing to 1.5%, and there are plans to reduce it even further. If you have a mortgage on a house, you may have many questions buzzing around inside your head. Many analysts are saying that the UK could face a very deep recession, so what does that mean for your mortgage? What does it mean if you want to get a mortgage?
With a variable or capped mortgage, you could of course be benefiting a great deal from the low base interest rates. However many people decide to opt for a fixed rate mortgage because of the security it offers - and the interest rates on these mortgages are significantly higher than 1.5%. There are options you can explore if you happen to have a fixed rate mortgage, however, to try and seek a benefit from the worldwide recession.
The whole process of refinancing your mortgage is made extremely easier if your mortgage is at the end of its term, and needs to be refinanced. However if this is not the case, talk to your current lender; find out what they can do to help. But don't stop there - check with other lending institutions and find out what products they have, and what they can do to get you out of your current mortgage.
Unfortunately for everyone, including new homeowners looking to get their first mortgage, lenders are also tightening their credit. Even though the Bank of England base interest rate is 1.5%, lenders may charge a higher premium to someone who, even a short time ago, might have qualified for a lower rate. Even further, lenders could refuse a mortgage to someone who may have qualified for it in the past. With less credit available, everyone is being very careful.
There is, thankfully, help on the way from the government. Banks are getting money from the government in order to grant new mortgages, so it may be possible to obtain one for the first time. It is prudent to ensure that your credit is in good standing and that you have a good debt ratio, or else you may not be approved - even with an influx of cash for new mortgages.
As always, check with a financial advisor or a mortgage broker to explore your options. While rates are low, mortgages approvals aren't increasing due to a tightening on credit. It is difficult to obtain a mortgage in the UK, but not impossible.
Graham J Head
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