Can I Still Get A Mortgage?

Problems related to the credit crisis have led many banks and building societies to withdraw many mortgage products. Furthermore, the Council of Mortgage Lenders CML, say problems in the mortgage industry may get worse before they get better.  However, despite the difficulties of getting a mortgage, it still is possible for those who are dedicated to buying, especially if you have a big deposit.

Mortgage Products Withdrawn

• 125% Mortgages
• 100% Mortgages
• 95% Mortgages are becoming less common. For example, Britannia, and Alliance and Leicester have capped their mortgage loans at 90%. Other lenders such as Nationwide have said that loans of 95% of LTV will be significantly more expensive

Mortgages More Difficult to Get

• Interest only Mortgages
• Self Certification mortgages

Why is it More Difficult To Get A  Mortgage Now?

• Prospect of falling house prices. House prices are falling at their fastest monthly rate since 1978. This means many homeowners could be left with negative equity. This is one reason why lenders are preferring to see a big mortgage deposit.
• Shortage of Funds in the Money Markets. Since many American subprime mortgage lenders went bankrupt there has been a shortage of lending funds in many of the money markets; therefore building societies are increasingly unable to lend.
• Higher Interest rates. The shortage of funds is pushing up in the interbank lending rates. Thus, lower Bank of England base rates are not being fed through into lower mortgage rates for consumers.
• Bank of England reluctant to cut base rates because of persistant cost push inflation.

How Can I maximise Chances of Getting a Mortgage?

• Save for a deposit. See: Saving for first mortgage deposit
• Be Patient. With house prices falling and prospects of lower interest rates, there may be no harm in waiting a few months before buying.
• Maintain good credit record.
• Save money in other areas