If the answer’s yes, then you’re not alone.
Until recently, remortgaging was a chore that was often put off until the 11th hour. Even then, it was sometimes completely forgotten about – an oversight which bumped homeowners onto the much less attractive standard variable rate (SVR).
However, the term ‘less attractive’ is relative and now, in August 2023, what is deemed less attractive is likely to be much more expensive than the SVRs of days gone by.
We’ve seen attitudes to mortgages change quite dramatically over recent weeks. Instead of people thinking, ‘I’ll wait until rates go down and grab the best mortgage deal in the UK then’, they’re now thinking ‘I need to grab this deal now before it’s replaced with a more expensive one.’
As a Guildford mortgage broker that’s seen its fair share of mortgage market ups and downs, it’s fair to say that this current situation is quite unique. High inflation, increased borrowing costs and falling house prices is making people think twice when it comes to moving house.
Yet, whether you’re moving or staying put, if you have a mortgage then at some point, your mortgage deal is going to come to an end. So, what do you do?
How to get the best mortgage deal
If you’re about to revert to the SVR, then you have no choice but to remortgage (unless you’re happy with the SVR rate, which is highly unlikely). And, as it stands, the best mortgage deals are likely to be today’s mortgage deals.
So, the question, therefore, comes down to whether you apply for the best fixed rate mortgage available or explore the UK’s best tracker mortgage rates.
One question our team of Guildford mortgage advisers are being asked a lot at the moment is ‘should I get a long-term fixed mortgage?’. And it’s no wonder that people are asking this, particularly as rates continue to be volatile and the media continues to issue stark warnings about the future.
Not only that, but longer-term fixes are becoming cheaper than shorter term fixes, which is highly unusual. Typically speaking, the longer the fixed mortgage timeframe, the higher the rates are.
But should you take out a long-term fixed mortgage?
The pros and cons of long-term fixed rate mortgages
Just like with any fixed rate mortgage, the main benefit is budgetary certainty. Imagine knowing how much your mortgage is going to cost you for several years? Well, with a five-year fixed rate mortgage, for example, you can.
You’ll also reduce the mortgage fees that you will pay if you’re changing your mortgage every year or two. Paying one mortgage setup fee over five years is better than paying two or three.
Perhaps the biggest perk of long-term fixed mortgages is that for their entire duration, you won’t have to justify affordability, pass credit checks or worry that you’re not going to be given a mortgage.
The downside, of course, is that you’re locked in for a long time. So, if the Bank of England drops the base rate to 0.50% and you’re on a five-year fixed deal, then you’ll be paying much more than those who aren’t. Another downside is that any Early Repayment Charges are likely to be high, too.
If you are considering a fixed rate mortgage, then our opinion is to go no longer than three years. Whilst things are difficult at the moment, the expectation is that inflation and mortgage rates will start to decrease in 2025, so be wary of over-committing. Obviously everybody’s circumstances are different and that’s why it is important to speak to a mortgage broker.
We always recommend that people seek mortgage advice from a mortgage broker. Not because that’s our job, but because the benefits of using mortgage brokers clearly outweigh the benefits of not using one. But given the current economic turbulence, and if you are considering fixing for a long period of time, then speaking to a mortgage broker is a must.
Can we help?
If you’re looking for guidance from a Guildford mortgage adviser, get in touch with our team of Surrey mortgage brokers on 01483 238280 or e-mail info@complete-mortgages.co.uk.
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