5 five reasons to lock into an ultra-low fixed remortgage rate
Smart UK homeowners are rushing to take advantage of today’s rock bottom fixed remortgage rates.
The deals available are some of the cheapest ever. But they may not be around for long. It’s why thousands of savvy homeowners are scrambling to remortgage fast and cash in.
Figures by the Council of Mortgage Lenders show the number of people remortgaging in January soared by 46% over December 2016. And, 21% more homeowners chose to remortgage in 2016 than in 2015.
“Those who have not yet switched to a fixed-rate deal should act quickly,” says Sam Brodbeck, senior personal finance writer at The Telegraph. “Fixing your rate should be a matter of urgency.”
A survey by moneyfacts.co.uk shows that 31% of eligible homeowners are hoping to cash in on low interest rates in 2017 with a mortgage switch.
Remortgage rates have rarely been betterAre you looking to save money by remortgaging? There are strong political and economic reasons why remortgaging now makes sense. Opting for a fixed rate does too.
Here are 5 reasons why now’s a good time to grab an ultra-cheap fixed-rate deals.
- Lenders are offering historically low fixed rates. So it’s the perfect moment to capitalise on them. Remortgaging your home means you could save money by lowering your monthly outgoings. Or release equity. Or fund home improvements such as an extension or loft conversion.
- These deals are not going to be around forever. Some rates are already beginning to rise. Nobody knows how Brexit will impact the UK economy. But the Office for Budget Responsibility thinks inflation will rise above the Bank of England’s official 2% target by April. A cost of living rise might push it to hike its leading Bank Rate from its all-time low of 0.25%. Variable mortgage rates will increase then. Cheap fixed rate deals for new borrowers and remortgagors will shrink too.
- Political uncertainty means future wage growth and cost of living are out of your control. Remortgaging to fix your mortgage makes one part of your personal finances predictable. A fixed-rate mortgage means the interest rate you’ll pay is fixed for the period, whatever happens. It&squo;s why the popularity of longer fixed rate deals has surged.
- Lenders are offering historically low rates on 5- and 10-year fixed deals. But they’re starting to increase. These long fixes used to be unpopular with borrowers but not anymore. A lot of remortgagors see the security as a real plus now. Yes, there’s a risk that taking a longer-term fixed rate could see you paying over the odds if rates change. But, say independent experts moneyfacts.co.uk: “This is not a large risk in the current low rate environment.”
- If you’re thinking of remortgaging your home, the chances are you’ve got some equity in it and a lower loan to value (LTV). This means you’ll likely get a much better remortgage rate.
Should you remortgage now with a fixed rate? A few things first
- The cheapest remortgage deals are not all about rate. Lenders add extra charges, such as arrangement fees. Do your sums and check the deal is as good as it sounds.
- You’ll have to undergo an affordability test. When you took out your first mortgage, did the lender just check your credit score and multiply your income? Now lenders want a lot more detail.
- Considering fixing for 5 or 10 years? Factor in the effect of early repayment charges. Some deals are more expensive to end early than others.
- Think about using a broker to help you find the right remortgage rate. That’s what Moneysavingexpert’s Martin Lewis recommends. “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.”