A study conducted by Equifax demonstrates that nearly 1,500,000 mortgage borrowers will find it difficult to remortgage.

The major credit reference agency of the UK informs that many borrowers intending to come off fixed rate deals in the nearest future will have no other alternative but to switch to Standard Variable Rate (SVR) deals offered by the existing lender, because the deals of other mortgage providers will not be easily available to them.

In fact, remortgaging activity has experience a sharp decline since the start of the credit crunch. Partially, this is due to the fact that, with Bank Base Rate at only 0.5%, many loan providers have offered low SVR deals, so that borrowers have been comfortable with these rates when their deals have ended.

In the meantime, mortgage providers made their criteria stricter and required larger deposits or equity, whereas due to house price drops a great number of homeowners were no longer eligible for new deals, since they no longer had sufficient equity in their homes.

More rigorous criteria at the moment mean that applicants must have impeccable credit history even if they have sufficient amount of equity for obtaining a new deal.

However, while remortgaging is not available for thousands, Equifax indicates that some borrowers could improve their chances if they prepare beforehand.

Neil Munroe, External affairs director, recommends that homeowners start looking for the best deals available on the market right now. There are strategies for cleaning up one’s credit history, which will be of help when it comes to switch onto a new deal and/or lender.

An Equifax research has also revealed that about 62 per cent of UK borrowers whose mortgage is due this year have not even started searching for better options.


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