Remortgage challenges

If you are remortgaging today, you will face a new set of challenges. Until six months ago, anyone could arrange a mortgage, but today it is the job of a seasoned professional who specialises in mortgages. All the general criteria lenders use to decide who to lend to have tightened up, and competition has virtually disappeared, so there are fewer options available to you.

Perhaps the biggest issue is for the person coming off a fixed rate from two years ago. If they are forced onto a standard variable rate, they may see payments rocket by up to 64%. Even if they are offered the best two year fixed rate, they will face a deal 35% more expensive than the one they are currently on.

Nationwide announced recently that they are now moving to quality rather than quantity in deciding which mortgage advisers they work with. A specialist Independent Financial Adviser (IFA) will know exactly how to position your case with a lender and will invariably have clout because of their buying power. A fee-charging IFA is a better option as some lenders don't pay commission, and a financial adviser not charging a fee may be less likely to use them as they will not get paid.

Ensure you look at any mortgage package in its entirety. The rate is just one part of it and other add-on fees could prove expensive. They are often added onto the loan, and whilst that is less painful, it all adds up. Watch out for being tied into your mortgage beyond the normal term at a higher rate. It is a common ploy that catches many people out. Also, if you find a good deal, act quickly, as rates are disappearing almost as they appear.

Ask your IFA to negotiate with your existing bank. A good fish that's getting away is more attractive to a fisherman than the cost of finding another.