It will come as no surprise that mortgage lenders are refusing to re-refinance credit worthy landlords (and general homeowners) because they no longer have enough equity in their property.
There are three main reasons why those who have a good credit rating are not being allowed to remortgage:
a) The falling property prices over the last year has caused a number of people to go into negative equity
b) Surveyors are under-valuing properties even further as they are scared that if things go wrong they could get sued by vendors. This means that landlords and homeowners are being told they are in negative equity or do not have enough equity in their property to remortgage.
c) The amount of equity required to refinance has now shot up to as much as 40% and this has meant that again they no longer have enough equity in the properties to remortgage.
Therefore, for those seeking refinancing onto a new competitive mortgage agreement, the path is a thorny one because of the downward valuation of properties. Borrowers who were once very credit worthy and had invested huge amounts are now being refused remortgages because of the lack of equity!
Experts are blaming banks and building societies for being over cautious about lending in a climate of depreciating assets. This is despite the Chancellor and Gordon Brown asking for all banks to pass on the base rate cuts over the past months.
Did you know?
