Property special - Beat the credit crunch
Not so long ago, banks and building societies were tripping over themselves to lend you money. The landscape couldn’t be more different today but that doesn’t have to mean shelving your plans to buy
If you are looking for a new mortgage, consider the issues around affordability, the tie-in period of the deal, the loan to value percentage available and other conditions. Do not focus on the published headline rate and assume that is the deal for you. The increase in conditions and eligibility criteria mean the low rate deal may not be available. So you may have to start your search all over again.
If your mortgage is up for renewal, do not automatically accept the deal from your current provider. Your loyalty may be costing you and there may be a better deal available elsewhere. If you are on a 100% mortgage, start planning for the end of your deal now to avoid payment shock. You may not be able to switch to a new deal if you have not built up sufficient equity in your property. Otherwise you will have to accept the higher variable rate. This could mean your interest rate significantly increasing.
Stress-test your current household budget. What impact would a higher interest rate have on the affordability of your mortgage? How will other areas of household expenditure have to change? Increase your payment each month by £50 or £100 and see what this leaves you.
Protect your credit rating: avoid leaving footprints on your credit report. Many people don’t realise that as you visit product comparison sites, you can be requesting multiple quotes and each one could leave a footprint on your credit rating which will reduce your credit score.
Consider the cost of your mortgage today and also against the plans you may have for the future, whether it may be starting a family, retiring or any event that will impact your financial commitments.