For many, a remortgage seems like the best solution, particularly when they are faced with a foreclosure. However, homeowners need to be cautious about getting a remortgage, especially if they do not have enough equity in their home. Experts warn that this situation can make a remortgage very dangerous for a consumer, and they may not know how much risk they are facing.”Those people with loans up to 125% of their house’s value are genuinely between a rock and a hard place. The price of their house may have fallen and they won’t have built up enough equity to secure a better deal,” said Francis Ghiloni, Marketing and business development director at mortgage comparison service mform.co.uk.”The risk of negative equity becomes real when borrowers get into difficulty with high mortgage payments,” said Katie Tucker of mortgage broker John Charcol. “Very few lenders can offer mortgages above 90% now, so it is vital that homeowners reprioritise their spending for this year and pay off capital wherever possible, to ensure they qualify for a remortgage when the time comes. A valuable £1,200 can be knocked off your debt with an overpayment of £100 a month,” Tucker added.
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