Martin Lewis: A warning to everyone with a mortgage
New mortgage deals are at their LOWEST EVER rates, with two-year fixes down to 0.94 percent and five-year fixes at 1.14 percent (though beware of hefty fees). This ferocious lending competition for the best customers means that, for some, remortgaging – switching deal without moving property – can result in phenomenal savings.
Mortgages start at 95 percent LTV but get far cheaper at 90 percent and again at 80 percent and 75 percent, bottoming out at 60 percent. Use any savings to push to a cheaper level if you can.
After that, assuming the property is suitable, there are two tests of acceptance.
1) Are you creditworthy? A poor credit history can torpedo an application or disqualify you from the cheapest deals. Check your credit file for errors, and try to minimise other applications, excess debt and credit (ie, access to borrowing even if unused) in the run-up to getting a mortgage. For how to check files for free and other tips see my www.moneysavingexpert.com/CreditBoost guide.
2) Can you afford it? Lenders must do strict checks to see if you can afford repayments; not just at current rates, but stress-testing how you’d cope if they rocketed. They want evidence of income, bills, expenses and sometimes even eating out.
