Life can be unpredictable, and sometimes we’re hit with unexpected challenges, such as a decline in the value of our property. But don't let this financial hurdle discourage you. Falling house prices don't necessarily mean you should avoid remortgaging. In fact, rolling onto your lender's standard variable rate when your current mortgage deal ends could cost you more than if you remortgage.

 

Keep in mind if your house value has decreased, you may have fewer options available because your LTV (Loan to Value) will have increased. Lenders are less likely to offer mortgages to borrowers with high LTVs because they’re considered to be at a higher risk of default. This doesn’t necessarily mean you won’t find a deal, but rather be offered a higher interest rate and be required to pay a larger deposit. 

 

If you're concerned about your remortgage options for this reason, and have a while to go before you need to remortgage, you might want to consider overpaying your mortgage. Even a slight overpayment can have a huge impact on the amount you owe in the long run. 

 

For example, if you were to make an additional monthly payment of £50 on a repayment mortgage of £150,000, with 20 years left and an interest rate of 4.5%, you would save £6,760 in interest and shorten the mortgage term by a year and six months. Most lenders will allow up to 10% overpayments per year, but check your terms and conditions before making an overpayment to avoid any additional charges. 

Also, keep in mind that you can start shopping around for a new mortgage deal up to six months before your current deal ends. If you’re an existing Furness customer, you can do this online by logging into your account and keeping an eye on our rates until you need to switch. 

Negative equity is a tough situation that sees the value of your home fall below the amount you owe on your mortgage. This can make remortgaging extremely difficult as lenders generally don’t loan over 100%. Once your current mortgage deal ends, you may have to switch to your lender's Standard Variable Rate (SVR).

 

If you find yourself in this situation, overpaying your mortgage would be highly recommended. Paying extra towards your mortgage each month, if you can afford it, will help you pay off your mortgage debt faster and eventually get out of negative equity. It's also important to note that the value of your home may increase again over time.

 

Remember, you must keep up with your monthly mortgage payments to avoid any problems. As long as you make your payments on time, your home will not be repossessed due to negative equity.