This summer may well be the best time to remortgage your home, given the unsettled economic landscape.
With Brexit and wavering inflation rates, UK business confidence is at its lowest level in six years.
It’s not clear exactly how the cash in our pockets will be impacted. But we do know that the economy’s growth rate is likely to continue slowing this year and next. And that consumer spending will get squeezed by rising inflation and falling living standards. This is what consultancy firm PwC has predicted.
There’s little most of us can do to protect ourselves against all this. But one thing is certain. If you’re fortunate enough to be able to remortgage your home now, you’ll be in a stronger position to weather any uncertainty.
Take advantage of low interest rates
Many of us tend to think of our mortgages as a one-off buy. We’d be better off, though, if we looked at them as an ongoing process and reviewed them regularly.
In a low rate environment, it’s the proactive and well-informed borrowers who swap deals regularly who reap the rewards.
Get the right deal and you could well make your loan more affordable by reducing your monthly payments.
And if it’s certainty you’re after, you could consider a fixed-term low-interest mortgage deal. Your payments will stay the same, regardless of changes to the interest rates in the market place.
Best reasons for remortgaging
Slashing your monthly payments is the obvious reason to consider remortgaging. Other reasons might be:
- Your current deal is about to end. So you’re about to revert to your lender’s standard variable rate (SVR)
- You’d like to swap to a different kind of mortgage, such as a fixed, capped or tracker
- You need a more flexible mortgage, such as one that can let you miss payments or make excess payment
- Your home has grown in value making you a great candidate for a better mortgage deal
- You want to release equity for home improvements or borrow money against your property
So is remortgaging right for you?
Here are some factors to consider:
How much is your home worth?
House prices are still rising across most of the UK. To get a reliable value for your home, the quickest way is to ask two or three estate agents round to value it.
The more your property is worth, the lower your loan-to-value (LTV) for your remortgage. That’s how much you’re borrowing as a percentage of the value of your home. The lower your LTV, the better deal you’ll be able to get.
Are you sticking out of misplaced loyalty?
If you’re still with your original mortgage provider, you’re likely losing out. A recent survey found that six out of ten of the UK's largest lenders charge their own customers higher rates than those switching from another lender. That’s because they’re saving the better rates to attract new customers.
Maybe you have an exit fee on your existing mortgage? With today’s deals, that fee may still be worth paying to get a better deal overall. So shop around.
Are you only focusing on the interest rate?
Yes you should hone in on the interest rate when comparing different remortgage deals. But don’t ignore the fees. There are many mortgage deals right now with eye-watering low rates but with hefty fees on top.
So do your sums. If you’ve a big loan, it may well be worth paying the bigger fee to get that competitive interest rate.You can take independent advice on this or compare mortgage rates and fees using a mortgage calculator.
Get some independent advice
The finer details of remortgaging are complicated (and boring!). Working out the best deal for your particular circumstances can be time consuming. What will work out best for you? A low interest rate or a low fee?
Think long-term and consider using a mortgage broker to help you navigate the mortgage landscape. Using one could well save you a lot of money.
Our 10-point checklist here will help you get ready to remortgage. Follow it and you’re more likely to have your application accepted too.
Want to know whether remortgaging will really save you money?
We'll be happy to help you here: https://www.mortgageadviceservices.co.uk/Labels: best time to remortgage your home, help to buy remortgage, remortgage advice, time to remortgage
