IS IT TIME FOR A NEW MORTGAGE DEAL?

new mortgage dealIf you’re currently thinking about remortgaging, you’re not alone. Whilst the Bank of England isn’t currently forecasting that rates will rise anytime soon there’s no guarantee that they will stay low forever. And, of course, your mortgage payments probably represent one of your biggest monthly outgoings so it makes sense to ensure you’ve always got the deal that best suits your personal situation.

The general feeling is that we may all have become rather too complacent about low interest rates. So, it’s hardly surprising that many homeowners are looking to take advantage of low mortgage rates while they are still available. Recent research from legal conveyancing firm LMS shows that 64% of people surveyed had remortgaged to take advantage of a lower rate, whilst 24% did so to increase the size of their mortgage and free up capital. The money was used for a variety of purposes – with 19% of respondents using the capital to fund home improvements, 9% to consolidate their debts and 1% to give their children a financial helping hand.

A more attractive mortgage deal?

In some cases homeowners can save hundreds of pounds a year by moving their mortgage to a more attractive rate with a different lender. Nearly two-fifths (37%) of respondents surveyed by LMS who remortgaged were able to make a monthly saving of up to £500, and 3% were able to save more than £500.

This could help ease the family budget or provide spare funds which could potentially be saved tax-efficiently in an Individual Savings Account (ISA) or used as a pension top-up, all without adding to the amount of loan outstanding (although there are fees associated with remortgaging).

Your options

If your current fixed-rate, tracker or discount deal is coming to an end, you may find your loan is moved to your lender’s Standard Variable Rate (SVR). The SVR is usually pegged to a percentage above bank base rate, and can be subject to change by the lender. Anyone on an SVR is vulnerable to interest rate rises when they come.

If you’re currently in a fixed-rate or tracker mortgage with early-exit penalties, there is no need to wait until it comes to an end. Your adviser can help you find a deal three months before your lock-in period finishes.

Another common reason for a remortgage is the chance to vary the terms of your loan to make it more flexible – for instance allowing you to make higher repayments and so shorten the overall mortgage term.

So is it time to think about your options? It makes good sense to check your current mortgage with us to ensure that you’re on the most appropriate deal for your financial circumstances.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up the repayments on your mortgage. A fee may apply for mortgage advice and, if applicable, you must ask your adviser for details before making any decision relating to a new mortgage as the actual amount will depend on your personal circumstances, but the typical amount is 1% of the loan value (on a typical £100,000 mortgage, this would be £1,000).

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