When Property Prices Fall Remortgages And Mortgages Also Fall.

When someone wants to purchase a home he must first of all apply for a mortgage.

Unless a person has an extremely healthy bank balance or daddy has a lot of money almost everyone needs a mortgage to purchase his home.

This applies whether the prospective property buyer is a first time buyer wanting to get his or her foot on the first rung of the property ladder or whether it is a homeowner who already owns a property but wants to purchase another home.

A Englishman's castle is his home is a true saying and UK citizens really do want the best home that they can afford.

More accurately they want a mortgage commensurate with their earings that can buy them the best and biggest home that this amount of mortgage can in fact purchase.

This applies both to first time buyers and to home movers.

Normally one's first home is not the home of his or her dreams, and a first house is really a stepping stone to a better property later on when income improves.

When people can afford to move to a better home they normally do when they earn enough to obtain a large enough mortgage. They are confident that not only are they moving to a more expensive property but they are investing money at the same time.

However during the fist year and a half of the credit crunch property prices fell and people were loathe to buy a first property or to move to another property.

The certainty that a home is a good investment changed.

Remortgaging invovles switching from one mortgage lender to another to obtain a lower interest rate.

Remortgages can be used for almost any legitimate reason, including holidays, weddings, motorhome purchase, etc.

A very oommon reason for taking out a remortgage is to arrange debt consolidation which is the consolidating of all debts such as credit cards, etc. and paying off all the debt with one much lower payment.

With credit cards attracting interest rates from 20% up to more than 40% compared to remortgages at from 1.98%, the savings through debt consolidation can be tremendous.

Remortgages decreased in the same dramatic fashion as did mortgages when house prices fell, as many were no longer eligible for low remortgage rates as the value of their home fell and their equity was therefore reduced.

When house prices started to rise in April 2009, and continued to do so for seven months in a row, mortgages increased and remortgages even started to see a revival.

The news on the property front is that house prices have again fallen by 10%, and although a slight fall is common during November and December, the 10% fall is above that normally expected at that time of year.

It is to be hoped that the fall will not continue after the start of 2010, as if property prices continue to fall mortgages and remortgages are bound to follow.

by: Liz Moir

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