Is now the right time to remortgage?

Why many homeowners will be re-evaluating their mortgage options

With UK mortgage rates stabilising and forecasts suggesting potential reductions, many homeowners will be re-evaluating their mortgage options. Could this be the moment to act and remortgage? For some, remortgaging could lead to substantial savings, potentially amounting to thousands of pounds annually.

If your current mortgage deal is set to expire within the next six months, now is the time to consider starting the remortgage process. Acting early means you could lock in a favourable rate now while maintaining the flexibility to pivot to a more competitive deal should mortgage rates improve further before you make your choice.

Review your options if you’re on an SVR

The situation may feel more urgent for those currently on a lender’s standard variable rate (SVR). SVR rates are typically much higher than the competitive remortgage deals available on the market. By not acting, you may be losing out on significant financial savings each month.

But saving money isn’t the only reason to consider remortgaging. Many homeowners remortgage to access additional funds, which can be used for home improvements or consolidating high-interest debt. The flexibility to adapt your finances to suit your needs is one of the key advantages of remortgaging today.

Planning for 2025 and beyond

If you’re currently enjoying a cheap fixed-rate mortgage that runs until 2025, you may be bracing for increased costs. Even the most competitive mortgage rates in the current climate are higher than the deals many homeowners have secured in recent years. However, remortgaging remains a potential money-saver. Staying on your lender’s SVR after your fixed rate ends could cost far more than opting to remortgage for a new fixed term.

Remortgaging can also give you certainty over your monthly outgoings if you fix your rate. This stability ensures your repayment amount won’t change during your fixed term, making budgeting easier. That said, fixing your mortgage means you won’t benefit from falling rates if the Bank of England cuts the base rate further.

Choosing between 2, 5, or 10-year fixed term deals

Deciding the length of your fixed-term deal can be tricky. A 2-year deal might seem appealing if you expect mortgage rates to improve in the near future, allowing you to remortgage onto a cheaper rate when the term ends. However, shorter fixed terms often come with higher rates compared to 5-year fixed mortgages.

For those seeking long-term stability, a 5-year fixed term can offer peace of mind and protection against potential rate increases. Alternatively, a 10-year fixed term may suit homeowners who value consistency and wish to avoid repeated arrangement fees over the coming years. The additional benefit of such an extended fixed term is protection against tighter lending criteria that could make remortgaging harder in the future.

Trade-offs of long-term fixes

While a 10-year or longer fixed mortgage offers predictability, it’s not without its risks. Opting for a long-term fix could mean you miss out on better deals if rates drop significantly during your term. Additionally, consider how it could limit your flexibility if you wish to move home. Some mortgage deals are portable, allowing you to transfer them to a new property without penalty, but this isn’t guaranteed.

Before committing, think carefully about your long-term plans and how they align with the terms of your mortgage. This will help ensure your decision remains advantageous for the years to come.

Comparing tracker and variable rate mortgages

While fixed-rate mortgages are favoured for their predictability, tracker and variable rate mortgages offer an alternative worth exploring. A tracker mortgage adjusts in line with the Bank of England base rate—so if interest rates fall, your monthly repayments will decrease accordingly.

On the other hand, discounted variable rate mortgages follow the lender’s SVR but apply a discounted rate for an agreed period. Beware, though—your payments are still subject to fluctuations as the lender amends their SVR. The advantage of certain variable rate deals is the lack of early repayment charges, giving you the freedom to switch to another deal later with minimal financial impact.

Taking the next step

Navigating the mortgage market can feel complex, particularly when rates are in flux and your financial needs evolve. Whether you’re motivated by potential savings, the prospect of financial flexibility, or the security of fixing your repayments, remortgaging can be an opportunity to reassess your financial priorities.