All over the newspapers and television you will have read and heard about the credit crunch and the fact that the number of lenders in the mortgage market is falling. However rest assured that it is still possible to secure a mortgage.
But let's start back at the beginning...for a mortgage to fall into a subprime category you either need to have had some previous credit problems or to of self certified your income. These factors make you a higher risk to lenders and in the current market lenders are more choosey about whom they lend too. This in turn means the rates are higher and the lending criteria have been tightened.
The number of lenders in the subprime sector has reduced along with the number of products available but if you fall into the prime residential category then this will not affect you.
Several high street lenders have returned to the 95% loan to value (LTV) market in the recent weeks although the rates reflect the perceived risks of the higher loan to values with rates starting at 7.29%. Guarantor mortgages are also available up to 95% LTV this is where a close relative of one of the applicants is also named on the mortgage and part of their income is used to assess the application. If you do require 100% then you will need to finance the deposit elsewhere either with a loan from a relative or another financial institution.
A 25% deposit or equity is where you see a major reduction in the interest rates with rates at around 5.69% and if you happen to fall into the sector with a 40% deposit or equity then you may be eligible for rates as low as 5.49%
If you are coming to the end of current deal then you would be best advised to seek independent advice. An independent adviser has access to all deals on the market some of which are not available on the high street or on the internet. They will also contact your existing lender to see what rates they have on offer.
If you did take out a 100% mortgage and are now looking to remortgage then your first port of call should be your existing lender. Even if they are not accepting new business at the high loans to value many lenders still have retention products available to you and you may even find that the lenders standard variable rate is just as competitive particularly if your mortgage happens to of been with Scottish Widows bank.
Yes it is true that the mortgage market has had a bumpy ride this year. The Bank of England has been reducing base rate but the mortgage rates on offer to new customers have been increasing. Fixed rates have also been increasing as these are guided by the price of money being bought and sold between the different banks (known as swap rates). However the last few weeks has seen a fall in mortgage rates and a return to the higher loan to values by a few lenders, and calmer lending market then we had earlier in the year.
However the point remains that as the mortgage market moves through these changing times the need for truly independent advice is crucial. Rates and criteria are changing rapidly and in order to be certain you are getting the best advice you need to deal with a company that has access to all the lenders.