Why now is a good time to remortgage
Is now a good time to remortgage?
There are a million different reasons why you might want to remortgage. For example, you might be at the end of a fixed-term deal, perhaps you want to access some equity from your home, or you might want to keep your expenses as stable as possible.
But is now a good time?
Apparently, by the end of this year, 1.8 million in the UK will have reached the end of their fixed-term mortgage deal. However, as homeowners are increasingly worried about the rising cost of living and interest rates, you might ask if now is the right time to remortgage.
This is something we talk to customers about more and more.
Historically, over the last ten years, most remortgage deals have been made by people whose loan was ending or those who wanted to get cash out of their home’s equity. But lately, we’ve talked to many homeowners wondering if they should remortgage much earlier than usual. Many wonder if paying exit fees could be cheaper than the risk of interest rates increasing.
Let’s take a look at the choices.
Is it worth fixing your mortgage for the foreseeable future?
The rise in interest rates over the past 18 months has shocked a whole generation of homeowners.
Since the 2008 economic crash, we’ve grown used to artificially low rates. As a result, many people have been shocked by how quickly changes in the base rate can affect their mortgage payments.
The Bank of England is still trying to fight inflation, which is at 10%. We don’t have a crystal ball, so we can’t tell what will happen in the next six to twelve months. After the changes caused by the Autumn 2022 budget, the mortgage market has calmed down, which is good. Still, rates are much higher than we’re used to.
Fixing your mortgage can suit those nervous about the ongoing cost-of-living crisis. Having a stable outgoing can give peace of mind, although we predict more people may be looking for shorter-term fixes, perhaps 2- or 3-year deals, than 5-year fixes.
If you want to re-mortgage to a new fixed term rate, look at your current deal. We can usually set up new contracts with fixed terms up to six months before the end of your current deal. If you stay longer, you might have to pay an exit fee
In some situations, the exit fee may be more affordable than another hike in interest rates.
Could a tracker mortgage be a good idea?
A tracker mortgage will rise and fall in line with the Bank of England base rate. As a result, some people may choose to re-mortgage to a tracker rate because it will allow them to benefit from any immediate falls in interest rates. However, on the other hand, it also puts them at risk of higher monthly mortgage repayments if interest rates continue to rise.
Tracker mortgages have been a relatively safe bet for homeowners in recent years because interest rates have remained remarkably stable. But as interest rates change dramatically, you might be better off fixing on a short-term fix to allow the market to stabilise itself.
The issue with sticking with an Standard Variable Rate (SVR)
If you don’t do anything and your fixed-term or tracker mortgage deal ends, you will automatically be moved to your lender’s SVR rate. Currently, about 773,000 Brits are paying their lenders’ SVR, which is usually between 7% and 8%, which is much higher than the current fix, which is between 4% and 5%.
We don’t like it when people pay an SVR rate because it’s like throwing money away when you don’t have to.
So, we tell homeowners to start thinking about re-mortgaging in the last year of their deal, so we have time to get something ready to switch to as soon as possible.
What should you look for in a mortgage deal?
If you are considering switching your mortgage, speak to one of our mortgage advisers.
We know that mortgages can be complex, but choosing the wrong deal could mean overpaying far more than you need to. We can look at your current mortgage deal and your finances and find a deal that will save you money.
With today’s ever-increasing prices, can you afford not to consider remortgaging to a new deal?
Here are a few things you should consider if now is a good time to remortgage.
Are you on a Standard Variable Rate?
Our experienced team will check you haven’t already transitioned to your lender’s SVR. We don’t want you to pay more than you must in mortgage repayments.
Do you know what you’re looking for?
With lightening quick reflexes and access to the entire mortgage market, we can access the best deals quickly. But beyond that, we can offer advice and guidance and give you confidence you’re choosing the right deal for you.
What about exit fees?
If you are currently on a fixed-term deal, you should look at any exit fees or repayment charges, and we’ll compare them to any new offers. In some situations, switching to a new deal now and paying an exit fee could be cheaper in the long run than waiting and returning to your SVR or seeing your rates keep increasing.
There are also hidden costs involved
Even if you’re not moving house, moving to a new deal could incur costs such as arrangement fees, surveyor costs and even solicitors fees. Our team of advisers can look at these costs and establish if remortgaging to a new deal is the right financial move for you.
Use a mortgage calculator
If you’re unsure whether remortgaging is the right move for you at the moment, why not play around with our mortgage calculator? It indicates how your mortgage repayments could change simply by moving to a new deal with a different interest rate.
We can make the whole process easy for you
If you want to switch from your expensive, Standard Variable Rate mortgage or your fixed-rate or tracker deal is coming to an end, now might be a good time to think about re-mortgaging.
As prices and bills keep increasing, having one expense that won’t change for a while will help you plan your money better.
But it can be hard to figure out which mortgage deal is best for you.
That’s why we advocate for talking to an experienced independent mortgage adviser (like us!).
We promise we will find the best remortgaging deal for your needs or determine if your current mortgage arrangement is better. We know what is happening in the market, and our years of experience mean there can be many ups and downs, but nothing that we haven’t seen before.
Our approach is to work individually with you. We’ll look at your finances and ensure we’re finding the right deal for you in the short term and the long term.
To receive impartial specialist advice, please contact The Mortgage Experts today and start living your best life!
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE