Many of us are returning to remote working and the possibility of a second lockdown is a real and present threat. You might find that as we head into autumn you have more time on your hands.
Whether your current mortgage deal is coming to an end or the original deal has expired – pushing you onto your lender’s Standard Variable Rate (SVR) – current low interest rates might make this a perfect time to look at remortgaging.
Here’s everything you need to know.
Low rates are good news for borrowers
In response to the coronavirus pandemic, the Bank of England dropped the base rate earlier this year from 0.25% to 0.1%. This is bad news for savers, but it could save you money if you’re a first-time buyer, have a tracker mortgage, or you are looking to remortgage.
You might benefit from the post-lockdown surge in house prices that the property market is currently experiencing. If your home’s value has increased, and because you still owe the same amount, the equity you have may have risen. This might give you access to lower interest rates.
Keep in mind that your personal situation and lending criteria may have changed since you last applied for a mortgage, so securing a mortgage with a better interest rate is not guaranteed.
Also, remember that remortgaging can take time, so if you’re thinking about it, speak to us now.
We can help find the right deal for you, although that might not be the cheapest deal in a ‘best buy’ table. It might be cheap, but does it offer the security you need? Is it flexible enough in terms of overpayments?
We can help find the type of deal that is right for you, and then find the best rate after.
Things to check before you remortgage:
Not only do you need to find the right deal, but the timing needs to be right too. Check through the following questions and if you’re unsure of the answers to any of them speak to your current mortgage provider, or speak to us.
1. Are you tied into a deal with your existing lender?
It’s important to check whether you are still on a fixed or tracker rate mortgage deal, or whether you’re paying your lender’s SVR.
If you are on your lender’s SVR then you will typically have no early repayment charge to pay and are free to continue your remortgage search.
If you are still on a deal though, you might find your lender levies an Early Repayment Charge (ERC) for leaving the deal early. Often charged at a percentage of the amount you repay, the charge could run into thousands of pounds.
2. What are the fees associated with your new deal?
When comparing the lowest rates available in the market, it’s important that you also consider the fees that are associated with each product.
Some lenders can charge an extremely low interest rate on mortgages by applying very high fees for the deals. These arrangement fees could total hundreds of pounds or more, making a deal that looked competitive suddenly a lot more costly.
It’s possible that choosing a higher interest rate with a lower fee could save you money in the long run, so be sure to speak to us if you’re unsure.
3. What is your current credit score and what can you do to improve it?
If you’re staying with the same provider and not asking for any more money, your lender might not look at your credit history. But why take the risk? Check your credit score and you can avoid any nasty surprises and give yourself time to rectify any mistakes.
You can check your credit score through any number of companies. The three main credit reference agencies are Experian, TransUnion, and Equifax. You should be able to get a copy of your credit file online. If there are any mistakes on it, get these fixed before you apply to remortgage.
Be mindful of your spending in the months before an application. If you have credit cards or personal loans, pay as much off as you can and stay out of your overdraft too.
Cut back on your spending to perform better in your lender’s affordability ‘stress test.’ Cancel direct debits for goods or services you don’t use, eat out less, and avoid large purchases if you can.
Finally, shop around. Or speak to us and we’ll shop around for you. Our qualified and professional mortgage advisers can do the arduous work for you, taking the stress out of finding the right mortgage.
We research the market, are aware of a wide choice of deals, and by understanding your circumstances, can compare loans and lending options to find the right one for you.
Get in touch
If you are thinking about remortgaging, get in touch now. Please email hello@fingerprintfp.co.uk or call us on 0345 210 0100.
Please note:
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
