If you are considering re-mortgaging you may be in for a shock. Low interest rates are now only available to people whose mortgages represent less than 60% of the value of the property. But as property prices continue to fall, the percentage of the property’s value taken up by the mortgage inevitably rises.

The problem is that homeowners may not realise that the falling value of their property has pushed them into a higher loan-to-value category (LTV). This can really push up the interest rate you’ll be offered when you re-mortgage. Take the Halifax for example. If your LTV is less than 60% then the interest rate you’ll be offered is 4.69%. Between 60 and 75% LTV the rate rises to 5.02% and from 75 to 85% it’s 6.09%. At 85 to 90% LTV you’ll pay 7.09%.

If you’re having your home re-valued, be sure to make the valuer aware of anything which may push up the value of your home in comparison with other properties in your locality. And if you have savings, you should also consider using some of that money to reduce the size of the mortgage you need. If you’re lucky, that money could drop you down into a lower LTV band and into a lower interest rate. That would save you quite a lot of money.

So if your mortgage deal is coming to the end of its offer period, check out the position a.s.a.p. In our view, property prices will continue to fall for some time yet, so the later you get a valuation, the lower the valuation will be.

But the end of a special period is no cause or panic. At the end of the special deal period, most lenders will automatically switch their borrowers onto their Standard Variable Rate (SVR). Since many SVR’s are now down to 3% or so, that in itself can be a good deal.

Our advice is check it out a.s.a.p. but don’t panic!