What are my remortgage options?
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What Are My Remortgage Options?
Tim Marcer talks us through our remortgaging options and answers some frequently asked questions.
My mortgage deal is coming to an end. What should I do?
Basically, I think anybody and everybody should contact a mortgage broker. Friend of the nation Martin Lewis always recommends speaking to a broker and not a bank.
The reason is that the options and choices we provide to individual clients are always specific to your needs and requirements.
Is now a good time to remortgage?
[podcast recorded in October 2023]
You should always look at remortgaging, regardless of the economic climate. If you’re coming off a fixed rate deal or a tracker deal, you’re likely to be going on to the lender’s standard variable rate.
That would usually be higher than a deal your lender or another lender could offer. So it’s always a good time to review your product.
How quickly can you remortgage?
The remortgaging process is where you go from one lender to another. It can take a little longer than getting a new deal from your current lender, because solicitors and valuations are involved and documentation is checked.
We always like to allow about three months for that. Even if we get it done early and everything is ready to go, the mortgage offer will be valid for six months. Now, in the current mortgage world, we like to contact clients six or seven months out from their deal ending.
Because mortgage offers are valid for six months, we can adapt to any changes thereafter. So the sooner, the better. There’s no harm in doing it as early as we possibly can, because then we can sit on that product and that rate – don’t leave it to the last minute.
If things do drag on or there are complications, it means you could tick on to the standard variable rate of the lender for a month or so – that would limit any savings you could possibly be making. So the earlier, the better.
Can I remortgage before my deal ends?
The answer is yes, however, this is the importance of speaking to a mortgage broker. We will analyse all the cost implications of doing so. If you remortgage during a deal, then most mortgages will have an early repayment charge. It’s a penalty for coming away from that mortgage within the specific two, three or five year deal that you may be on.
A mortgage broker would weigh up those costs to find out whether it’s financially viable. We’d look at those costs and the rate you’ll end up getting. Some products, such as tracker rates, don’t have any early repayment charges whatsoever, so we can look at those as well.
But speak to a mortgage broker. We will give you all the options and ideas, and do the analysis on whether it’s commercially and financially viable to change that product before it ends.
Can I move to a new rate when my current mortgage deal ends?
Absolutely, yes. There are many different options at the moment for all different situations.
Every client is different, in their circumstances, work and family situation. Personalising recommendations to each specific client is absolutely vital. When we’re looking at what the client wants from a product, we will consider their preferences and plans for the next two to five years and advise and recommend accordingly.
A new rate should always be available in place of going on the lender’s standard variable rate – which could be 2% to 3% higher than other deals. We’re currently seeing deals [as of October 2023] where the lowest ones are either side of 5% – but standard variable rates are either side of 8% as we speak today.
Can I extend my mortgage term?
Yes, subject to terms and conditions, feasibility and plausibility. Lenders have different options and criteria on mortgages. By the end of your mortgage term you have to be a certain age – either state retirement age, 70 or 75.
People think it’s daunting to have a mortgage till they’re 70 or 75 – but if it’s feasible, a lot of people now work until later in life, so lenders will offer mortgages to that age.
If your mortgage is currently expiring when you’re 50 or 55, you may have some leeway to extend the term. Some people are doing that at the moment to minimise the increase of interest rates and reduce their mortgage cost.
Then maybe if interest rates do come down in the future, they could look to be bringing those years back down. It’s a fluid recommendation – it’s not set in stone for the next 10 or 20 years. It should always be reviewed and personalised depending on the client’s circumstances.
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Can I fix my mortgage with rates increasing? How long should I fix my mortgage for?
Yes, you can fix your mortgage. It does what it says on the tin, basically. A fixed rate will be set for a period of time so you can budget accordingly.
For two, three or five years, for example, it is not going to go up or down and so you can budget for that period knowing what your mortgage will be. There’s no right, wrong, good or bad choice on how long you should fix your mortgage for. It’s down to the individual circumstances.
Will mortgage rates go down in 2023?
It’s a personal opinion, but based on the data and the information we receive in the industry, what we see in the press, from the government and from the Bank of England, there’s a feeling that the base rate has peaked.
There’s debate about that and it could move another quarter or half a percent. Nobody really knows. I think we’re going to see how inflation pans out for the next 12-18 months – the government feels that it will come down. Once inflation is under control, hopefully interest rates will fall too.
There’s been a lot of volatility over the past 12 months since the mini-budget in September 2022. Rates went up quite considerably from September to November. Then we saw a reduction of mortgage rates from November through to around April, and then they rose again from April for several weeks. They’ve been coming down over the last six to eight weeks, as well. All that volatility in just one year.
Can I remortgage with credit card debt?
With any debt like personal loans, car payments and credit cards, a mortgage broker will assess the affordability of any individual client including any debt. That could include other things like student loans and childcare costs. All these factors come into play when assessing affordability for a mortgage lender.
Lenders each have their own individual calculators and the right data has to go in them to get the right numbers out. An experienced mortgage broker knows what data to put into these calculators, to assess how much a client could borrow based on their individual circumstances.
Can you remortgage a Help to Buy loan?
Yes, you can. You would have to get official valuations done to assess how much money you owe back on the government scheme. If there’s sufficient equity in the property, there are possibilities to do that.
As you can probably tell by my answers there, it has to be specific – there’s a bit more work to be done. But we certainly can do that for clients.
How can a mortgage broker help if somebody is looking to remortgage?
There’s one major point I’ve not touched on yet. I mentioned looking at your remortgage as early as possible. We have a database of all our existing clients and, with their permission, we contact them seven months in advance of their current deal expiring.
We’ll have an introductory call and refresh the client’s memory of their product and their outstanding balance, etc. Then we explain what we can do for them – we explain the volatility of the market and that we don’t know where it’s going. We then secure a rate for the client but they don’t have to commit to that rate or that product.
If rates go up, we’ve already secured a rate to safeguard them from paying more than they need to. If rates come down, we can change that product as many times as we need to for the benefit of that client.
It’s not just the rate – we can change the product too. If somebody started out looking for a five-year fix and then two months later changes their mind to a two-year fix, we can do that.
Over the last six months we’ve changed clients’ products perhaps seven or eight times as the rates have reduced. One example recently was where clients had secured a five-year fixed and then we got notification from a lender to say they were reducing their rates.
We looked at the rates for that client and by switching we could save them £70 per month. Over five years, which is 60 months, that’s a hell of a saving.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.