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Remortgages just got more difficult!

Date Added: October 10, 2008 05:34:29 PM

Breaking news from the Halifax Bank, they are reporting a 13% drop in house prices for the last year and they claim that the current house price drop is the fastest and largest house price drop they have ever recorded. The Halifax says that the monthly house price drop of 1.3% per month is now in its eighth consecutive month.

This means that house prices today are worth the same as they were in January 2006, which is great if you’re in the market to buy a home and it is a nightmare if you need to sell your home. For the rest of us homeowners the drop in house prices is not an issue as long as you have no intention of selling your home for now.

The average value of a home before the announcement by the Halifax Bank was £170,000. Today that same house is worth 13% or £22,100 less, this means that the average house in the UK is now valued at £147,900.

There is a belief that the housing market will always bounce back, but there is no guarantee that it will always happen. Remember the 1980’s when house prices did not move for nearly a decade and negative equity affected lots of homeowners. So be cautious!

This drop in house prices is bad news for homeowners that are struggling to find a mortgage at 90% to 95% loan-to-value. This report from the Halifax Bank means that more homeowner are now in negative equity and there are no mortgage products available above 95%. In order to qualify for a 95% mortgage or remortgage you do need to have an excellent credit file with no missed payments and have been employed for longer than a year.

Whilst we have had an interest rate cut yesterday it still needs to be passed on to homeowners. Anyone with a Tracker, Discount or a Standard Variable Mortgage should see an immediate reduction in their monthly payments. For example someone with a £100,000 mortgage will see a reduction of £41.66 in their mortgage repayments per month.

Unfortunately, anyone with a Fixed Mortgage will find that they are not affected by the current mortgage rate reduction. Most of us with fixed rate mortgages will have to wait for our mortgage scheme to come to the end of their penalty period before we can remortgage to a better deal; unless it is worth paying the penalty to get out of your current arrangement.

Don’t be in a rush to get the best mortgage, remortgage, or buy-to-let deal around today, it is going o take time for these new rates to feed through properly, so don’t just go for a quick mortgage now. The City is still expecting a further rate cut from the Bank of England before January 2009, so just be patient!

The money saving expert will recommend that you look to credit card consolidation in order to get rid of your highest interest rate payments and the same money saving expert will recommend that you consolidate your secured homeowner loans within any new remortgage arrangements. This is great if you feel the need to reduce your outgoings in order to live. You need to consider the fact that you will be putting short term debts over a long term period. I personally would recommend that you find a mortgage consultant or mortgage broker to access your situation and to search the mortgage market for the best mortgage product for your personal circumstances

Contributing author Mark Aucamp has been providing website content and is acknowledged as having experience in Debt Management and providing Mortgage Advice. Mark is the administrator, editor and author of Talk Money Blog where he offers advice on Money Saving Tips, personal finance, Mortgage Help & Advice and debt solutions. Why not visit: or