Is it too late to remortgage?
Mortgage rates have started to move back up from their record lows, but that doesn’t mean you still shouldn’t shop around for a new rate.
Pricing on mortgages has hit record lows in recent years due to rock-bottom interest rates and support from initiatives such as the Bank of England’s Term Funding Scheme (TFS.)
But interest rates were increased last November from 0.25% to 0.5% and the Bank of England has hinted that more hikes could be on the way.
This has already been reflected in some of the rates on offer.
Bank of England data shows the average rate on a two-year fixed rate mortgage at 60% loan-to-value in September 2017 was at a record low of 1.22% This increased to 1.47% in February.
Meanwhile, the TFS, which was setup by the Bank of England in September 2016 to provide a cost-effective source of funding to lenders to encourage lending to borrowers, ended in February.
Rising interest rates and the lack of cheap money on the wholesale markets gives banks less incentive to lend at lower rates for mortgages.
But remortgages are still low compared with the start of the decade and the cheapest rate isn’t always necessarily the right deal as you also have to factor in any product and broker fees.
There are also more uses to remortgaging than just getting a lower rate. You may want to move from a tracker to a fixed rate to protect yourself from any rate rises, or if you are moving to the end of a deal you may want to avoid falling onto the usually high standard variable rate.
You can also remortgage to release cash that could fund home improvements or a big purchase such as a car or to fund a wedding. If your property value has grown, you could take out a bigger mortgage and release the extra cash to spend as you like. You could even purchase another property and become a buy-to-let landlord, although this would also have other fees such as extra Stamp Duty costs. Some buy to let mortgages are not regulated by the Financial Conduct Authority but we can explain how this works and your options.
The amount you can borrow for a remortgage in any situation would depend on your property value and whether you can meet a lender’s affordability criteria. A broker such as The Orchard Practice can be crucial in helping you select the suitable lender for whatever reason you may be remortgaging for.
YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
