Q. I have a number of investment properties and their respective mortgages are coming to the end of their current deals. They were arranged 3 years ago on fixed rates. With the current ‘credit crunch’, what do you recommend I do to secure a good rate for the next 3-5 years?
A. As you will have read in the press, the majority of lenders have tightened their lending policies. Where some were lending at 100% (on main residentail loans), they have now restricted their lending to 80% maximum.
You still have a number of options though. What you should probably do is:
- contact your existing lender(s) and see what deals they can offer you
- then ask them what they can offer if you move all your mortgages to them (they may not be keen on this as they way want to reduce their risk)
- contact a good mortgage broker and get them to research the market on your behalf. With the recent upheaval in the mortgage market a good broker will make your life a LOT easier. Ask the broker to see if they can beat what you’ve been offered by your current lender(s)
- if good deals are available, I recommend you apply for the loan ASAP as many lenders are withdrawing their deals at very short notice
- if you do the research yourself, make sure you factor in ALL the costs so that you can compare the deals against each other
You may want to consider fixing the mortgage (or getting a tracker for example) for a period of 5 years or so (providing you are not planning to redeem the mortgage in the meantime), as mortgage arrangement fees have been increasing during the last 2 years. If you opt for a 2/3 year deal, you will probably have to pay another arrangement fee when you re-negotiate then (obviously, it’s hard to say what the position will be).
