Mortgages cost more but property costs less

2008 is set to witness a ‘debt famine’ as the cost of living and buying a home shoots through the roof and mortgages are harder to come by.

Mortgages are harder to get, and those who already have them are facing financial stress. But as the bottom falls out of the property market and the credit crunch is making itself known, many first time buyers and homeowners will want to take advantage of lowering property prices. And they’ll need to find competitive mortgages. Although mortgages now cost more, the chance to get on the property ladder could in the long term make people more economically and emotionally happy.

Competitive mortgages harder to find

Mortgages are also more difficult to obtain. As Gordon Brown said, 2008 will be a ‘very big year’ for the UK as it faces up to economic gloom. “There is less money around for people to borrow and at higher rates,” he told the press. The cost of mortgages has reached a seven year high as the credit crunch takes its toll. Figures released by the Bank of England shows that the average homeowner now pays an additional £135 a month on their mortgage than in the previous year.

Higher cost of mortgages

The huge increase in the cost of mortgages has raised fears of a rise in repossessions. But as accountants predict record insolvencies and bankruptcies, it could be good news for some. As property prices drop, more buyers will be in a more favourable position to finally find the home of their dreams at a price that doesn’t give them nightmares.

Take steps to reduce mortgage risks

It isn’t just mortgages that cost more, utility bills, the cost of food, fuel prices and credit card interest rates are all rising at a rate that will cause misery for millions. The Financial Services Authority fears the rise in mortgages could leave 1.4m households struggling as their fixed mortgage rates end. As lenders crack down, it can be difficult trying to remortgage or find a good deal. But there are steps you can do to minimize the risks:

• If you are one of over a million homeowners with mortgages coming to the end of their fixed rate terms, speak to a mortgage broker to find the best deals.
• Buying a property is usually a sound long-term investment – if you’ve found one you love, don’t be put off by the economic forecasts, you can find competitive mortgages, especially if you have a clear credit record
• Like any loan, mortgages are costly – it may sound crazy ploughing in any spare cash you might have into your mortgage, but by reducing it you’ll be reducing hefty monthly repayments.
• Interest only mortgages are one way of reducing monthly outgoings, but beware – you will have to pay more interest over the period of the loan.

Beat the mortgage blues with Homebank
If you are looking for a new mortgage, let the experts save you time and money by finding the right mortgage for you.

Homebank have qualified mortgage consultants ready to advise you with all your mortgage and insurance needs. For informative, insightful mortgage advice, call us to arrange a no-obligation appointment to suit you.

Homebank are the “people’s mortgage broker”, with thousands of mortgage products to choose from, including some that are not readily available on the High Street. Homebank’s experienced consultants could find the ideal mortgage for you. Call Homebank now, free, on 0800 052 3604.