Tuesday, 14 November 2017

Why the interest rate rise is a reminder to us all to check out our remortgaging options

So it’s happened. Interest rates rose on 2 November from 0.25% to 0.5% – jolting many homeowners to consider their remortgaging options.

And while it was a small increase in the base rate, the knock-on effect has been fast. Lenders have reacted, with many removing their lowest-price remortgaging deals.

Moneyfacts has released data showing that nearly half of lenders have withdrawn at least one of their cheapest rates during the last month.

The Bank of England’s rise lifts the rate back to where it was before the EU Referendum. At 0.5% it’s still at low levels historically. So should you panic?

Prepare your remortgaging options

The answer is no, but you should definitely take a look at your remortgaging options.

If you now have a variable rate tracker mortgage linked to the base rate, chances are you will see an immediate effect on your mortgage repayments.
It's  the same if you're on a standard variable rate mortgage. Expect to see an increase in your rate in line with the interest rate rise or higher.

Inflation is still rising and above the Bank of England's targets. This is partly due to the 18% decline in value of sterling since 2015.

So most financial experts say they expect rates to rise to 1%, in two increases of 0.25%, one next year and one in 2020.

The 0.25% base rate increase to 0.5% is now, on average, adding £22 per month to a typical £175k mortgage, and £51 to a £400k mortgage.

A gradual 1% rate rise, looking at current average monthly payments for SVR customers of £525, would mean an extra £76 a month for the typical loan.

So if you’re a homeowner, with rates on a steady rise, now is the time to take action. If you're considering remortgaging, the best advice is not to procrastinate. The cheapest mortgage rates are disappearing fast.

Which remortgage deal is right for you?

Already the average two-year fixed rate mortgage has undergone its biggest increase in eight years following the Bank of England’s decision.

You may be sitting comfortably with a fixed rate mortgage now and thinking this won’t affect me.
It won’t immediately but when you’re ready to look for your next deal, expect to find the interest rates on the market much higher.

Remortgaging options are most relevant to you right now if you’re a borrower on your lender’s standard variable rate. Or if you're approaching the end of a fixed deal.

In this case, consider remortgaging as soon as possible to avoid disappointment in a market where rates are creeping up.

Be prepared to move your mortgage fast

There are still plenty of excellent deals around, whether you opt for fixed, tracker or variable. But these are likely to reduce as lenders react in advance to the anticipated rate increases.

The faster you can move in response to the rate rise, the better next rate you are likely to get. This is particularly relevant if you’re coming to the end of your deal and have no or little penalty charge.

Remember that most offers from lenders are valid from between three and six months so it's worth applying and getting the offer in the bag.

Beware of the affordability checks

But also be aware that affordability is a major issue now with all lenders. With rising inflation putting the squeeze on us all, they will be looking even more closely at your financing power.

April 2014 saw the introduction of the Government’s Mortgage Market Review. This obliges all lenders to do more to show that borrowers can afford to pay back their mortgages.

First, get your facts straight and get yourself remortgage-ready. We have prepared a detailed remortgaging 10-point checklist you can use here.

We advise using a broker to help you find the right remortgage rate. That's what Moneysavingexpert’s Martin Lewis suggests. “A broker should be able to quickly source a relevant product that fits your credit history. And offer an extra layer of protection if things go wrong. And carry more clout with lenders to ease acceptance on otherwise unobtainable mortgages.”

Want straightforward advice on remortgaging your home? We’re happy to help here.

Thursday, 2 November 2017

Why the number of people remortgaging their homes is the highest in 8 years (and what it could mean for you)

The latest finance figures show that over 36,000 people have just remortgaged their home in a single month. It’s the highest number of people to do this in eight years.

The record figures are due to three factors:
  • An unprecedented long period of low interest rates: The Bank of England has opted this August to hold interest rates at 0.25% as it delivered its inflation report and a rate decision on another so-called Super Thursday.
  • A plethora of incredibly low remortgaging deals spawned by the current mortgage ‘war’ between lenders. Lenders need to drum up business. This is to counteract the current drop in first-time borrower mortgages and the shortage of homes on the market slowing activity.
  • The fact that many people now have considerable equity in their homes and so are in a good position to leap on a more favourable remortgaging deal.


Remortgagers have never had it so good


The number of people remortgaging reached 36,800 in July, up 7% on the previous month and 10% higher than a year ago, says UK Finance.

The  association now collects the data that used to be delivered by the Council for Mortgage Lenders. It says that the increase in activity in July meant that, over the past year, the number of people remortgaging was at its highest since 2009. These 36,800 people remortgaged their homes to the tune of £6.7 billion; well in excess of the £5 billion first-time buyers borrowed.


Should you take advantage of rock-bottom remortgaging rates?


You almost certainly should if you’re now looking at your account details and realising your current deal has ended. You’ll most likely have been moved to your lender’s SVR (standard variable rate) so you could do much better.

Inflation rates rose to 2.9% in August and the cost of living is now being squeezed. So remortgaging to a fixed rate would mean you’d probably reduce your monthly payments. You’d also be able to set them in stone so you have more control of your outgoings.

Your mortgage is the one outgoing you make that you can have some control over. Fixing it is actually a sensible 'investment' decision because it protects you long-term against inflation. To find out the financial sense behind this, see our guide here.


5 solid reasons to remortgage


  • You’ll get a better interest rate when your existing mortgage deal ends.
  • If you’ve equity in your home you’re likely to get a better deal. Lenders award a better loan-to-value rate as the value in your home goes up.
  • You could remortgage to a more flexible deal. Remember lenders are bending over backwards for your business now. You could swap to one that lets you make overpayments or take payment holidays
  • You could remortagage to release cash from your home for some other big expense. This could be home improvements, a loft extension or a trip abroad.
  • If your earning potential has gone up since you took out your original mortgage, you could perhaps make higher repaymentsat a lower rate and pay off your debt more quickly.


Decided to remortgage? 


Basically it now boils down to opting for either a fixed rate or a variable or tracker remortgage.

At this moment in time, opting for a fixed rate makes a lot of sense as interest rates are now likely at the lowest they'll be for some considerable time.

A fix means you’re cushioned from any future rate rises and that you’ll know just how much will be leaving your bank account each month.

But do your calculations and take into account the arrangement fee your new lender may charge to give you the new deal. Very often though the fee can be worth paying.
Or should you go for a variable or tracker rate? These, right now, are likely to be more competitive than fixed rates.

A tracker rate follows or tracks the base rate so by definition they’re very low. But lenders are doing their best to compensate themselves by imposing higher fees so watch out for these.


Should you go it alone?


How you go about remortgaging is up to you. Some people feel confident enough to navigate the best buy tables and do their sums. Others prefer a little help from a remortgaging advisor.

Remortgage advisors will study a range of mortgage products that are right for your circumstances. So you’ll not find you've been turned down by your chosen lenders because you didn’t understand the terms and conditions.  They often do all the fiddly stuff such as the paperwork for you too, so your application will get put through faster.

To help you decide whether or not to use a remortgage advisor, see our guide here.

If you do decide you could do with some remortgaging advice, we offer a comprehensive range of first charge mortgages (but not deals you can only get by going direct to a lender). Find out more here.

Wednesday, 25 October 2017

Interest rates look certain to rise but there’s still time to remortgage fast

So it’s now official. Bank of England Governor Mark Carney has spoken. Interest rates will increase “in the relatively near term”.

While this is good news for savers, for those with mortgages that are not fixed, it’s not such good news. Especially if you consider that just 10 years ago, interest rates were 5.75%.


Strong reasons to remortgage fast if you can


If you’re a homeowner who knows that you’re likely to want to stay put for the next five years. Plus you’ve equity in your home, there’s still time to remortgage fast.

Thousands of people in Britain have realised the sense of securing their outgoings. It's why so many have remortgaged in the last few months.

In fact, a record number of remortgagors did this in August. They opted not for short-term fixes but for five-year fixed rates, in a bid to head off a potential rise in interest rates.

The FT reports that the numbers of people plumping for a five-year fixed rate rose from 37% to 39%.

This year, so far, in total, the number of remortgagers has increased by 16% compared to last year.


Don’t hang around


Already, lenders have begun preparing for the predicted rate rise. They've started slowly increasing the cost of their fixed-rate mortgages. In the coming months, the costs of lending are predicted to increase further.

So the message is remortgage fast and now if you’re in a position to do so. Even the BBC’s Personal Finance reporter Brian Milligan is warning: “Do not hang around”.

The reason for the rise is that market economics means that lenders are having to pay more to access the funds they need to lend out to property owners.

Base rates themselves may have not yet risen but the so-called 'swap rates' have gone up in recent weeks.

These are what lenders base their pricing decisions upon. Right now they’re reflecting the anticipation that base rates will go up pretty soon.


Hunkering down for the future


Six months ago the rush on remortgaging was being driven by the fact that homeowners could do so to release equity. They could use this to spend on extras such as holidays and home improvements. But many now seem to have a different reason.

Moneyfacts.co.uk reports: “Interestingly, many appear to be remortgaging to secure their finances, rather than increase the size of their loans.

“The low mortgage rates of recent years meant that many had previously been opting for the latter, capitalising on the chance to release equity and get a valuable cash injection without paying too much for the privilege.

But it seems that many are now taking a more long-term view of their finances.

According to the National Institute of Economic and Social Research, the UK economy will bounce back in 2018. if it does, it’s likely the Bank of England will raise interest rates to a more normal level than before Brexit. 

Are you re-mortgage ready?

If you’ve got an existing mortgage now, should you consider remortgaging fast?

It’s likely to be beneficial to you in these scenarios
  • You've equity in your property
  • You’re not locked into a fixed deal
  • You’re nearing the end of your term
  • You’re on your lender’s standard variable rate (SVR)
(SVR is the default rate most fixes and trackers revert to when the introductory deal finishes.)

Would you like some remortgaging advice? We offer a comprehensive range of first charge mortgages (but not deals you can only get by going direct to a lender). Find out more here.

Tuesday, 10 October 2017

Why you should be taking action if your is among the one in five UK households without home insurance

The 30th anniversary of the Great Storm of 1987 this month was a timely reminder of the importance of home insurance.

According to The Actuarial Post: “The Great Storm of 1987 was the most costly windstorm the UK insurance industry had seen to date. Claims reached £1.4bn (gross of reinsurance), which equated to nearly 50% of total property insurance premiums.”

Yet despite the more recent damage wreaked by Hurricane Ophelia in Wales and Northern Ireland, one in five homes in the UK is not covered by home insurance. That equates to 5.41 million people.

The survey carried out by housing and homelessness charity Shelter showed that despite the fact that winter is a peak time for insurance claims, people are ignoring home insurance altogether, or opting out of renewal, with 42% claiming that they cannot afford to take out cover.

The implications of not having home insurance, however, could be considerable. If a fire begins in an uninsured home and then causes damage to other surrounding properties, any uninsured person would be liable for repairs to all the damaged properties.

Although home insurance is not required by law, in the same way as car insurance, if you own your home outright, there’s a strong argument that it should be.

That’s why if you’re buying your home with a mortgage, your lender will almost certainly require you to have home insurance coverage. This is to protect your home in case of damage by unforeseen circumstances, such as fires or natural disasters.

Should home insurance be compulsory?

Jason McClean of Thepropertyinsurer.co.uk thinks it should. "Home insurance is not compulsory by law but maybe it should be because the repercussions of having no insurance can be similarly devastating as a car accident – not just for the home owner but for families and people living in adjoining properties,” he says.

 He explains that without home insurance, you could be made homeless.

But, he says, it gets “even worse If the uninsured property is a terrace, semi-detached or flat/bedsit and when it is destroyed it takes out one, two or three more properties around it”
In this kind of scenario a £1-million bill could be easily reached when you add in the total rebuild and contents payments, as well as any injury claims.

“Without insurance the careless or penny-pinching home owners are harming other people and that is the reason why the Government needs to make Home Insurance compulsory in the same way as car insurance.”

What is home insurance?


Home insurance is an all-rounder term that covers two different types of insurance:

  • Buildings insurance: for the structure of your home and the permanent fixtures and fittings, such as kitchens and bathrooms.

  • Contents insurance: for your home possesions, such as furniture, TVs, personal belongings and some types of flooring including carpets.
You can buy both types of insurance separately. Generally, however, you can get them more cheaply as a joint policy from one insurance company.

What home insurance do you need?

If you’re a homeowner you’ll need both buildings and contents insurance. If you’re renting out a property, you’ll need buildings insurance. If you’re a tenant, you’d be well advised to get contents insurance.

Home insurance costs, reports moneysavingexpert.com, have risen this year by 6.8% for buildings insurance and 4.4% for contents insurance.

How do you keep home insurance costs down

  • First, if you can afford to, don’t pay your premiums monthly but pay annually

  • Second, don’t auto-renew out of laziness: insurers keep their best deals for new customers.

  • Third, shop around and if you have specialist circumstances, then use a specialist home insurance broker.
For a full guide on getting the right home insurance, see our article here.

For personalised advice on the best home insurance policy for you, contact us here.

Tuesday, 26 September 2017

To fix or not to fix your remortgage deal – that is the question

Actually, for many people, it’s an easy answer.

If you’re considering remortgaging and you have a low loan to value then you’re in a strong position to get a good fixed rate. Your LTV is what you owe on your mortgage compared to value of your home),

If your fixed mortgage deal is almost at an end, then now is also a good time. Especially if you're already on your lender's standard variable rate (SVR).

Why fix your remortgage deal?

Mortgage rates are right now at record low levels. Choosing a five-year remortgage (or longer) would mean you would be sheltered from the impact of a base rate rise for years to come.

A fixed rate mortgage has an interest rate that doesn’t change for a set period. Terms vary from anything from two to 10 years. Your repayments stay the same every month. So you don't need to worry about fluctuations in interest rates.

In recent months, more and more remortgagors have clearly understood this. Moneyfacts.co.uk 37% of remortgagors opted for a fixed five-year deal in July. That’s the greatest number to date.
reports that there’s a big move towards longer-term remortgage deals. It says that

With inflation running at 2.9% in August, we’re all seeing our spending power eroded. This isn’t going to change until at least early next year. Inflation is forecast to be at or around 2.75% over the second half of 2017, according to the Bank of England Inflation Report.

Security in knowing your outgoings

So fixing for a longer period is increasingly attractive to borrowers. This is because it gives them real control over at least one aspect of their outgoings.

In the UK, more people are locking into five-year fixed rate deals in an attempt to beat a rise in base rates. There’s uncertainty about these right now. But the one certainty is that rates are highly unlikely to get any lower. In fact as inflation increases, the pressure for an interest-rate rise is starting to build. Many financial forecasters predict this must happen soon.

On top of this, the UK is facing a flat housing market. So opting to stay put and rein in expenses by fixing your remortgage deal is proving more appealing than selling up and moving on.

Many fixed-rate mortgages come with a fee. But it seems a growing number of remortgagors are prepared to shoulder the total cost of the deal in return for the financial stability they’re getting.

Take advantage of supply and demand

Many advisors say that the time to remortgage to a fixed rate, if that’s what you want, is now.

That’s because when the signs become strong that an interest rate is in the offing, more people rush to secure a fixed deal. But every mortgage lender will only permit a certain availability on each deal they offer. In other words, when they’ve fulfilled their allocations they’re gone. So it’s better to get in early.

So how do you go about it? Begin by looking at the best buy comparison tables once you have worked out your LTV. We’ve a checklist here to help you do that.

But be aware that you may not be eligible for them all. Comparison sites won’t give any information on the credit rating that you need. Nor if your particular circumstances will mean you will be approved.

To save time on wasted applications, you may well be better to use a mortgage advisor.

If you do decide you would like some remortgaging advice, we offer a comprehensive range of first charge mortgages. Find out more here: mortgageadviceservices.co.uk/remortgaging/

Monday, 11 September 2017

3 time-sensitive reasons why remortgaging for buy-to-let landlords is urgent now!

The pressure’s on for remortgaging by buy-to-let landlords for three strong reasons:
  • Introduction of tougher buy-to-let criteria this Autumn
  • Current improved choice of buy-to-let remortgaging products
  • Upcoming changes to buy-to-let legislation
If you’re a buy-to-let landlord, you may be feeling you’re part of a somewhat targeted group right now.

Across Britain, buy-to-let investors are feeling the heat. They’ve seen a stamp duty surcharge and harsher rules on lending.

Since April the government began to phase out the generous tax relief on mortgage interest payments.

That’s meant landlords can longer simply to subtract the interest on their home loans when working out their tax bill.

Now, they must pay tax on their total income — including rent — then ask HMRC for a tax credit of 20 per cent.

1) Introduction of tougher buy-to-let criteria this Autumn

The upcoming tightening of lending criteria for buy-to-let landlords is the latest measure by the Bank of England’s Prudential Regulation Authority (PRA) to slow down the buy-to-let market.

The first phase saw stricter affordability tests, including a stress test on interest rate rises, for landlords.

The PRA is now to demand changes to the way in which buy-to-let mortgage applications are underwritten. This will affect portfolio landlords most. It’s been spurred by evidence that arrears rates increase as portfolio size grows.

From September 30, if you’re a borrower considered a portfolio landlord (with four properties or more), you’ll be required to jump through more hoops to pass specialist affordability checks.

It’s not clear exactly how lenders will apply the guidelines but most likely all of the following will be looked at:
  • Your property investment experience
  • Your combined mortgage borrowing for your portfolio
  • Your assets and liabilities, including tax liability
  • The merits of any new lending in context of your existing buy-to-let portfolio,along with your business plan
  • Historical and future expected cash flow
  • Your income, both from property and elsewhere
So you need to get your paperwork prepared. You’ll need an up-to-date property portfolio spreadsheet, a business plan, cash flow forecasts, your last three months’ bank statements, submitted tax returns, and probably income and expenditure statements for your portfolio.

2) Current improved choice of buy-to-let remortgaging products

It’s not all bad news however. Market demand is supply based and right now that’s one thing that’s actually working in existing landlords favour.

That’s because diminishing demand for new buy-to-let loans has driven many lenders to slash their mortgage rates.

The average fixed buy-to-let rate is down from both the start of the year (3.34%) and last August (3.53%), standing at 3.22% in August 2017.

Of course, you have to meet the lending criteria however.

3) Upcoming changes to buy-to-let legislation

The National Landlords Association (NLA) is advising any landlords thinking about remortgaging not to delay.

The Head of Policy at the NLA, Chris Norris, says: “Since the PRA regulations were introduced in January, the marketplace is looking considerably more complex. It was always likely that lenders would start to demand more evidence from applicants, and landlords are already feeling they have to go further to prove that they can afford finance.

“Changes to buy-to-let taxation will eat away at many landlords’ profits and make it more challenging for them to manage their businesses. As a result, many are looking to limit their exposure to the changes, which is why we’ve seen a rise in remortgaging.”

He adds: “However, the situation is due to worsen from September and, while it may not be financially advantageous for everyone, if you’re considering remortgaging or expanding your portfolio, then do so now to avoid any further difficulties”.

If you’re a buy-to-let landlord and would like some help navigating these complexities for remortgaging, we will be happy to help you here.

Tuesday, 15 August 2017

The real reasons why a remortgage advisor will get you a better remortgaging deal

Should you go it alone if you’re remortgaging or should you use a remortgage advisor?

The answer will depend on your circumstances and the time you’ve got free to make it happen. Below, we’ll give you some guidance to help you decide which way to go.

But one thing’s for sure. If you’ve got a mortgage on your home right now, it’s worth considering remortgaging.

Strong reasons could be:
  • You've equity in your property
  • You’re not locked into a fixed deal
  • You’re nearing the end of your term
  • You’re on your lender’s standard variable rate (SVR)
(SVR is the default rate most fixes and trackers revert to when the introductory deal finishes.)


Firstly, because the chances of an interest rate rise look likely by or before 2018. By then, the Bank of England is predicted to begin withdrawing some of the emergency support it has injected into the economy following last year’s Brexit vote.

Secondly, because interest rates are, for now, at a historic low of 0.25%.

Thirdly, because the remortgaging deals available are better than they have been for more than a decade.

Remortgaging deals best ever

For most of us, our mortgage is our biggest expenditure. So slashing its cost is likely to be your biggest money saver.

The benefits of remortgaging, for most people, right now are high. There’s fierce competition between lenders. Many are offering remortgaging products at rock-bottom rates to encourage people to switch.

More than £35 billion worth of mortgages are due to mature in the next two months. This is the biggest period of home loan maturities in five years according to specialist data firm CACI.

Approximately £17 billion worth of mortgages are due to mature in September and £18 billion in October. So borrowers are being warned to take action and not to slip onto the SVR by just doing nothing.

DIY or remortgage advisor?

So how do you go about it? If you choose your own mortgage without advice it’s called an ‘execution-only’ application.

First, get your facts straight and get yourself remortgage-ready. We’ve prepared a detailed remortgaging 10-point checklist you can use here.

Comparing remortgages online is a place to start to get a general understanding of the market. But the detail can be befuddling.

There’s been a big rise in brokered remortgages in the last three years following the introduction of the Financial Conduct Authority’s Mortgage Market Review in April 2014.

This means lenders now have to ask much more detailed questions of borrowers. Now everything from your childcare to your travel costs to your pension contributions has to be considered to assess affordability.

In most cases, we think it’s worth tapping into the services of a remortgage adviser to get the best deal.

But be aware there are three varieties of remortgage advisor:
  • Some only deal with a specific leader
  • Some will offer you deals from a limited list of lenders, and
  • Others will be independent and cover the whole market
Obviously, in terms of the choice of loans available to you, a lender that is whole of market will have access to more options for you.

Nothing comes for free. Remortgage brokers may well charge you for their services. This will be either with an up-front fee or a % of your remortgage. Others won’t charge you. But they’ll get a commission from the lender (and that sum will be built into the product).

So ask the question. Remortgage advisors should tell you up-front how much their services will cost you or if they’re paid commission.

So yes, you’ll probably have to pay a fee, either direct or have this added to your remortgage. But overall, you’re likely to save thousands.

Top reasons to use a remortgage advisor

You’re protected because they have a ‘duty of care’ to you

Getting advice, rather than doing research on your own, means that if the mortgage turns out to be unsuitable for you later on, you’ll have more rights when you make a complaint. If their advice is not fit for purpose, you be compensated.


You’ll get the right product for you.

A remortgage adviser, sometimes called an independent remortgage broker, is a specialist with in-depth knowledge of the market. Not using one could mean your stuck with the wrong mortgage for your circumstances. This could be an expensive mistake you’re stuck with.


You’ll save time on research and wasted applications

Remortgage advisors will look at a range of mortgage products that are right for you. So you’ll avoid being rejected by your chosen lenders because you didn’t understand the terms and conditions.  They often do all the paperwork for you too, so your application will get put through faster.


You’ll get a product you can genuinely afford

Remortgage advisors are obliged to carry out the proper checks and go through your finances to make sure you can afford a mortgage. They will only recommend remortgage products that are suitable for youl. they'll also explain all the costs and features so you really know what you’ll be paying. It’s easy to get tripped up if you don’t understand the additional fees and charges.

The advice of Martin Lewis of moneysavingexpert.com? "The right broker is a big benefit. Far better to go to a broker than direct to one lender who’ll simply try and flog you their own mortgage. They will look after the market and possibly bring you better negotiating power. Overall I'm a broker fan!"
Would you like some remortgaging advice? We offer a comprehensive range of first charge mortgages (but not deals you can only get by going direct to a lender). Find out more here.