Following on from the post below I decided to offer a brief guide to the process of re-mortgaging, since I have largely ignored the topic until now.Firstly, there are several factors to bear in mind when looking to switch your mortgage provider. In recent years, banks and building societies have been hiking mortgage fees to subsidise attractive headline interest rates. So called mortgage arrangement fees have sky-rocketed as have charges for redeeming a mortgage. As a result, you have to do the sums to make sure that what you gain through switching provider - a lower rate of interest - is not lost through higher charges. The first step is to check the terms and conditions of your existing mortgage. These will tell if you are tied-in to your mortgage deal or if there are any redemption penalties - sometimes phrased as early repayment charges. If you are locked-in, you must decide if it is worth switching to a different rate or stay put until the penalties have expired. You may have been with your existing lender for a long time and feel a sense of loyalty towards the company. However, most lenders do not reward this loyalty with a reduction in rates. You should therefore expect to shop around and look towards a different lender to get a better deal.You will face a choice of broadly four types of deal: fixed, capped, discounted and flexible. Fixed-rate mortgages are ideal for people who want certainty and must be able to regulate how much they will be spending each month. The rate is usually fixed for between two and five years. Discounted loans offer a reduction off the standard variable rate for a set period. If rates fall further, the rate that you will pay will also go down. However, when rates rise, so will your mortgage payments. A capped-rate loan will set a limit on the rate you will pay. If rates rise, your payments will not go above that level. However, if rates fall below the cap so will your repayments. Flexible mortgages allow you to overpay and underpay when you choose and without penalty. This is ideal for people who have fluctuating incomes or who want to clear their mortgage early. An increasing number of fixed, capped and discounted deals have more flexible features as well. Lastly, avoid deals with extended redemption penalties. While these had been phased out in recent years, a number of lenders have reintroduced extended penalties to clamp down on so-called ‘rate tarts’ who move around frequently to get the best deal. Extended redemption penalties are often hidden in the small print of a mortgage contract and are sometimes called early repayment penalties or charges.

While the credit crunch affected the prospects for first time buyers and those looking to upgrade their properties and new crisis has struck the mortgage market leaving it weaker than ever. 

With house prices falling and consumer spending at its lowest for years the number of people re-mortgaging their homes has dropped sharply. The CML has released figures which show this drop to have been 23% year on year for the month of May. 

This represents a sharp U-turn from the booming re-mortgaging market of just a year ago when £500 million was handed out in loans every day.The data from the CML also showed that the number of loans taken out by home buyers has fallen by 45 per cent over the last 12 months, with just 7,900 home loans written.However, it is the drop in re-mortgaging levels that has surprised mortgage experts, who said it proved home owners were increasingly choosing to take out a fresh deal when their fixed rate mortgage comes to an end.Instead, many are choosing to move onto the bank or building society’s standard variable rate (SVR) – even though traditionally this is the most expensive rate.Some standard variable rates are now cheaper than fixed mortgage deals. And they are fee-free so lots of people are just sitting and waiting for rates to fall.For example, the
Halifax’s standard variable rate is seven per cent but the average three-year fixed-rate loan is 7.25 per cent.While it is possible to get a cheaper home loan, the best deals have high fees, unlike the SVRs. In a further sign that falling house prices are making it increasingly difficult for consumers to raise money, Firstplus, the
UK’s largest supplier of homeowner loans, has said it would stop selling new loans because of a collapse in demand.