Time for a fresh look at your mortgage?

In the current economic landscape, many homeowners may be asking the question: When is the best time to search for a new mortgage? Should they act now or hold onto their existing mortgage? This decision, far from being inconsequential, could significantly impact their yearly finances by thousands of pounds.

Your mortgage deal appeared quite competitive in its early days. However, it’s crucial to reassess your mortgage. Ensuring you’re on the most advantageous deal and interest rate is always a wise move.

It’s advisable to periodically review your mortgage, perhaps annually or every couple of years. This guarantees that you’re still reaping the benefits of the best possible deal and that your mortgage remains aligned with your financial objectives and circumstances.

DECODING THE MOTIVATIONS BEHIND REMORTGAGING

There are several reasons why you may need to reassess your mortgage. These can range from changes in interest rates, alterations to your financial situation, fluctuations in the housing market, or revisions to your personal goals.

It’s a significant decision that can shape your financial future, so understanding these motivations is crucial.

Here are instances to consider reviewing your mortgage:

SEEKING MORE COMPETITIVE RATES

One primary reason homeowners consider remortgaging is to secure a more competitive rate. However, breaking your initial agreement could result in an early repayment charge. That said, the savings from a new rate could offset this cost, making remortgaging a viable option.

SAFEGUARDING AGAINST RISING INTEREST RATES

As we have seen over the past year and a half, the overall cost of variable rate mortgages has increased, and other promotional rate deals have also risen. Securing a lower fixed rate mortgage through remortgaging could prove beneficial, especially if you anticipate an increase in the Bank of England rates.

CAPITALISING ON INCREASED HOME VALUE

With property prices often in flux, your home may fall into a lower loan-to-value (LTV) band than when you first secured your mortgage. In such cases, remortgaging could be advantageous.

REDUCING MONTHLY BILLS THROUGH REMORTGAGING

Mortgages often constitute our most significant expenditure, so reducing them can lead to substantial savings. Many of us may stay with our current lender to avoid stress. However, skilled negotiation and remortgaging could leave us better off financially.

NECESSITY OF REMORTGAGE AS CURRENT MORTGAGE ENDS

You’ll need to find another mortgage when your current one expires. Typically, mortgage deals last between two and five years and offer incentives like fixed rates, tracker or discount mortgages. However, due to market fluctuations, your lender will automatically switch you to its Standard Variable Rate (SVR) once your deal ends. This rate is often higher and pricier than other options, making remortgaging to a cheaper rate an appealing choice.

SEEKING INCREASED FLEXIBILITY

If you’re dissatisfied with the conditions of your current mortgage deal, you may want to consider a change. This could stem from factors like a new job, a career break necessitating ‘payment holidays’ or the wish to make larger payments due to increased income. If this resonates, an alternative mortgage may accommodate these needs or offer packages more suitable than your current lender’s.

THE DESIRE TO BORROW MORE

Life occasionally necessitates an extra cash injection. If your lender isn’t receptive to lending you additional funds, remortgaging with a different provider might allow you to raise the necessary capital or secure newer, more competitive rates. Your prospective lender will enquire about your intended use of the funds.

Don’t forget, our professional friendly advisors are on hand to support you and can help you explore all of your options.