The number of residential mortgages available is slowly increasing, but still the market is dominated by deals for customers with more than a 25% deposit, according to Moneyfacts. It says that in April 2009 the number of mortgages available hit rock bottom at just 1,209, a 90% drop from the peak of 11,951 products available in July 2007. Today there are 1,392 products available – if you have the equity.

Lenders are very much adverse to risk right now – that means if you want a mortgage you have to prove to them that you are not a risk. Today that means having plenty of equity in your home – the smaller the mortgage they have to offer, the less they could lose and the better bet you become.

Moneyfacts says: “Lenders are slowly taking small steps back into the market, albeit with a very cautious approach. The market remains dominated by deals for those borrowers with at least a 25% deposit as lenders look to cherry pick the best customers. Borrowers with just a 10% deposit are finally seeing increased options, but they are still paying a very heavy price for their lack of equity.”

The website says the best deal on offer for a borrower with just a 10% deposit is 2% higher than that available to those with a 40% deposit, adding £170 per month to the cost of a £150,000 mortgage.

So if you want a mortgage, you need to start investing in your home. Talk to a mortgage adviser about overpaying on your mortgage – by paying to much you decrease the size of your loan and immediately make yourself a better bet for another loan.

SOURCE: Moneyfacts, 14/09/09

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