100% remortgages

Many first time buyer mortgages in the last couple of years have been arranged on a 100% mortgage basis. This means there will be many borrowers who will be looking for a 100% remortgage. Northern Rock had successfully arranged many of these 100% mortgages with there Together 100% morgtage deal.

This meant that someone with debts could buy a house with a 95% mortgage and consolidate their loans with an unsecured loan of up to £30′0000. Many of these fixed rates will be coming to end this year. Northern Rock is not actively seeking to hold onto these mortgages due to problems it has been facing since the credit crunch. 

This means that these mortgages will revert to the lenders standard variable rate (SVR). There are still some lenders out there that are still offering a better deal than the SVR Northern Rock is currently offering at 7.79%.

If you take someone with a £100′000 interest only mortgage that has been on a 6.29% fixed rate for the last two years they will be currently paying £524 pounds per month. When that fixed rate ends their mortgage will revert to the lenders SVR of 7.79% the monthly payment will increase to £649 per month. If they speak to a broker and arrange a 100% remortgage they can get fixed rate at 6.99% for 3 years or 6.89% for a 5 years both are fixed. This will mean a payment of £585 or £574 for the 5 year deal reducing the increase by £75 a month on the 5 year deal.

The difficulty these borrowers will face since the tightening of credit will be subject to how good their credit rating will now be after maintaining a mortgage for the past few years. If they have paid all their monthly lending commitments on time and kept their heads above water switching to a 100% remortgage could be the best option if available to them