With the Bank of England setting interest rates at an historic low, there has rarely been a better time to find a competitive remortgage deal. If you want to qualify for the lowest mortgage offers, you are going to need a good credit rating. Lending criteria has been tightened in recent years, so only the best applicants will qualify.
Criteria for a low rate mortgage
The more equity you have in your property, the greater the variety of offers will be available to you. For example, if you home is worth £200,000 and your mortgage is £120,000, the Loan-to-Value (LTV) is 60%. You have £80,000 of equity. This is because it is a lot easier for the bank to recover its money if you default on the agreement. Affordability
You will typically be able to borrow up to three times the amount that you earn. It used to be possible to find higher ratios, but the lending criteria has been tightened. The fewer debts you have in your name, the more likely you are to qualify for a great remortgage rate. If you have any savings, use them to reduce the amount you owe or intend to borrow. Credit rating
The most reliable payers will always be offered the best remortgage deals. If you have defaulted on one or more of your credit agreements during the last six years, this will be visible to any lender who performs a credit check. Prior to making an application, order a copy of your credit report for £2 each from Experian, Equifax and Callcredit and check each of them for errors.
How to find a cheap mortgage
The banks like to establish a long-term relationship with their best customers. Provided that you've managed your accounts properly, you may be eligible for some pre-approved offers. When you log in to your online account, you can find a breakdown of the various offers which are available for you. Although you should still check what else is out there, it is a great starting point. Compare remortgages
Websites, such as Moneysupermarket.com, can be used to trawl the market for low cost mortgages. All that you have got to do is set the criteria and you will be provided with a comprehensive breakdown of the best mortgage deals. It is advisable to use a few different sites in case there are one or two exclusives which are not available elsewhere.