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Is it time to remortgage?

25.01.22

Should you remortage?

Like the cost of living, mortgage rates are on the rise and many borrowers will be looking to minimize what is their highest monthly payment.

However, their current deal might not be ending for a few months.  Help is at hand, with many lenders’ mortgage offer documents being valid for up to six months.

This is good news for those who engage with their broker early, as they might be able to lock in a new product now rather than wait until their deal is just about to end, by which time the rates will almost certainly be higher than they are at present.

For many, there will also be a desire to borrow some extra money for home improvements, education, weddings, and the like.

Borrowing extra money from your existing lender means applying for a further advance and the products for that are almost always more expensive than they are for a ‘main’ mortgage. This means that a remortgage (moving your mortgage to a new lender) can often be both cheaper and simpler in the long run, with the advantage of all your borrowing starting and ending at the same time.

Taking a further advance can often mean having to choose from a very limited range of products that might well not meet your future needs or expectations, creating possible problems further down the line.

Currently, (January 2022) rates are almost the lowest we have ever seen them – one of the main reasons the property market has done so well over the last two years.

In December 2021 the Bank Of England increased the base rate.  This was due to inflation increasing rapidly to over 5% and with a target rate of only 2%, there is an expectation the Bank Of England will make more increases during the year unless inflation starts to drop significantly.

Should that happen, those who plan and managed to lock in a deal now, even though their current deal’s expiry seems a little way off, will be very glad they did.

For example!

For a mortgage of £250,000 on a repayment basis over 25 years with an interest rate of 1.25%, the monthly payments would be approximately £975/m.  If rates increase 0.5% then the monthly payments would be approximately £1,033/m.  For many, this would be on a five year fixed rate basis meaning paying an extra £3,480.

If you would like to see what your mortgage could look like with the best rates available today, please see our ‘Find Your Mortgage’ online tool or arrange a call back.  If you would like to talk to an adviser now, please dial 0207 220 5110.

 

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