Should I remortgage?

Wednesday, 10th October, 2018
Guildford mortgage broker

This is a question that we hear time and time again. Thankfully, as a Guildford mortgage broker, it is one that we can answer.

However, before we get into the detail, it’s worth pointing out that recent data released through UK Finance revealed that 46,900 new homeowner remortgages were completed in July – over 23% more than the same period in 2017.

Furthermore, the value of renewed borrowing in July was £8.7 billion, which equates to more than 26% than in July 2017.

Is the UK a nation of intuitive homeowners, given how The Bank of England raised interest rates to 0.75% the following month? Or were these homeowners simply savvy and preparing themselves for an interest rate rise on the basis that, after years and years of low interest rates, it was only ever going to go up?

The simple fact is that there’s nothing like an interest rate rise – or even the threat of interest rates rising – to sharpen the focus of those with mortgages. After all, nobody wants to be caught short and faced with increased monthly mortgage payments that stretch the realms of affordability.

Recent interest rate rises do seem to have pushed the amount of remortgaging in the UK to a new high. However, regardless of interest rate rises – real, impending and possible – here are a number of reasons why you should consider remortgaging:

1. Beat further interest rises

As I’ve just covered, remortgaging – particularly when it comes to fixed rate mortgages – could protect you from interest rate rises and ensure that your outgoing monthly mortgage payments remain fixed in line with your monthly income (or at least fixed at a level you’re comfortable with). With many fixed rate mortgage options covering periods of up to 10 years, those who like to know where they are when it comes to mortgage payments my find this appealing. But remember, The Bank of England can also lower the interest rate at any time, too.

2. Avoid the SVR

If your current mortgage deal is about to end then you are likely to be switched over to the lender’s standard variable rate (SVR), which is highly likely to be higher than the one you’re on right now. Remortgaging is a great way of arranging a mortgage with a preferred rate and avoiding the SVR.

3. The equity in your property has grown

If the value of your property has increased since you took out a mortgage, then you may fall under a different loan to value bracket. If the loan to value ratio is smaller, then you might qualify for lower rates.

4. You’re tired of the inflexibility of the fixed mortgage

Whilst the fixed rate mortgage is great for those wanting security and consistency, they often come with a few negative aspects, too. For example, they tend to place limits on how much you can overpay – and penalise you if you pay more than is allowed each year. For example, if you were to receive an inheritance that would, in theory, pay off a significant amount of your mortgage, you may find yourself unable to do so without incurring fines. As part of the remortgaging process, you can wrap any windfalls into the new agreement, thus avoiding fees and arranging a new mortgage with a much smaller balance.

5. You are looking to borrow more, not less

People are always looking to move into bigger and more expensive properties. If that’s you, then there may be competitive mortgage deals available that enable you to borrow more capital without the monthly repayment being as big as you might think it would be.

As with these five reasons to remortgage and the countless others not covered here, the best way of understanding how you can benefit from remortgaging is to contact a mortgage broker. As an award-winning mortgage brokerage in Guildford that deals with remortgages on a daily basis, we can help. Simply contact the team on 01483 238280 or email info@complete-mortgages.co.uk.

By Mark Finnegan, Director at Complete Mortgages

Are you a mortgage prisoner?

Tuesday, 14th August, 2018
remortgage guildford

It’s now over 10 years since the financial crisis hit. And, whilst most of us have been able to put it behind us, there are a large number of people – an estimated 15,000 – who are still affected by its fallout in the context of mortgage applications.

These people, often referred to as ‘mortgage prisoners’, are those who were unlucky enough to apply for a mortgage before the crash and who were subsequently affected by the Mortgage Credit Directive – a post-crash EU ruling that subjects those applying for a mortgage to strict affordability checks.

As a result of the directive’s introduction, many people who would benefit from remortgaging are now stuck on lenders’ standard variable rate mortgages, which can have an interest rate of up to five per cent.

New standards

The good news is that a large proportion of mortgage prisoners now have the opportunity to be ‘set free’ following new industry common standards that have been adopted by 59 mortgage lenders, all of which represent 90 per cent of the residential mortgage market.

The new standards, which are the result of efforts between UK Finance, the Intermediary Mortgage Lenders Association (IMLA) and the Building Societies Association (BSA), mean that many mortgage prisoners will now be able to switch to better mortgage deals.

The standards, which apply to first-charge mortgage borrowers, stipulate that qualifying mortgage prisoners that wish to switch mortgage must:

  1. Be up to date on mortgage repayments
  2. Have a minimum term of two years left
  3. Have a minimum outstanding mortgage balance of £10,000

Sadly, the new standards excludes 20,000 people who have mortgages with inactive lenders and around 120,000 people who are currently with unregulated mortgage providers that are not members of UK Finance, the BSA or the IMLA.

However, at least a significant number of people now have the chance to arrange a mortgage that works for them and sees them saving money year on year.

If you feel that you are a mortgage prisoner and are wondering if you meet the standards recently announced, then Complete Mortgages can help.

Contact a member of the team on 01483 238280, who will be able to advise, guide and apply for a new mortgage on your behalf. Alternatively, for more information email info@complete-mortgages.co.uk.

Mortgage wars: a battle that shouldn’t be fought on price alone

Wednesday, 13th September, 2017

The Telegraph recently published a story that focused on the ‘battle for mortgage customers’ and the intensification of a war that is seeing lenders cut both their rates and penalty fees.

As a Guildford mortgage broker, Complete Mortgages feels and acts on the launch of each and every new mortgage product and the fluctuation of rates associated with those that already exist on a daily basis; indeed, it is our job to do so.

However, our view on the language used by the national media that places home buying in the context of a war – and the portrayal that the mortgage market is an arena in which only the cheapest product and lender will win – is bad not only for the mortgage industry, but also those applying for a mortgage.

Firstly, it’s important to highlight that the cheapest mortgage isn’t necessarily the best mortgage.

Evidence suggests that the average rate of two and five-year fixed mortgages has significantly decreased over the last seven years, and that’s undoubtedly a good thing. The more competitive lenders are, the more attractive their mortgage products become.

However – and this is very important – not everyone’s circumstances are the same. So, whilst a five-year fixed mortgage may be ideal for candidate A, it may not be so effective for candidate B.

Simply distilling mortgages and the mortgage application process down to a price war – something more akin to inexpensive consumer products such as bread and milk – doesn’t take into account the nuances surrounding each individual’s lifestyle and financial position.

It could also panic those looking for a mortgage into running headlong into a mortgage deal that may not necessarily suit their needs in the long (or even short) term.

The same Telegraph article suggests that lenders are already braced for a surge in new applications as a wave of existing fixed-term deals come to an end this autumn.

If this surge of applications originates from mortgage applicants who are well informed then we fully support that – but finding a mortgage broker who can guide you through the process and establish the right mortgage for you before you commit to anything should be your first port of call.

As an award-winning mortgage broker, our recommendation to those looking to secure a mortgage – or remortgage – is to seek professional mortgage advice; advice that treats a mortgage for what it is, which is a long-term commitment and not a simple day-to-day purchase.

If you’re looking at getting a mortgage – or remortgaging – this autumn then don’t get caught up in the bottleneck. From specialist self-employed mortgages and commercial mortgages through to first time buyer mortgages and adverse credit mortgages, Complete Mortgages can recommend a mortgage to match your own personal circumstances.

Contact us on 01483 238280 or email info@complete-mortgages.co.uk for an insightful, thoughtful and expert view on the current mortgage market – and a professional opinion on where you might fit within it.

By Mark Finnegan, Director at Complete Mortgages

Mortgage rules have changed again, but don’t stress

Thursday, 20th July, 2017

Mortgage affordability has, once again, come under the spotlight following the Bank of England’s (BoE) decision to ‘tighten’ the UK’s mortgage lending criteria.

Essentially, the affordability test, or ‘stress test’, which those looking to apply for a mortgage need to undergo, is changing.

Until now, those applying for a mortgage had to prove that they could afford to make mortgage repayments of 3% above the BoE’s base rate. However, the new rules state that the 3% stress test now tests mortgage affordability on 3% above the lender’s standard variable rate (SVR).

By now, you’re probably thinking ‘will this make it harder for me to get a mortgage?’, and we’re pleased to say that, in the main, the answer is ‘no’. And here’s the reason why.

Affordability vs. unaffordability

This is similar to the idea of need vs. want. As is often the case, what we want isn’t necessarily what we need. Likewise, with the new rules (albeit reversed), those applying to get a mortgage may not want to have to pay a mortgage that is 3% more expensive than the SVR, but the majority can if they need to.

Of course, there will be a section of the public who, when faced with this test, may be unable to prove that they could afford the repayments, however professional advice from a mortgage broker will often help applicants reassess their financial situation with positive results.

However, there is another solution.

Don’t rethink, remortgage

As we covered in our last article, the often-overlooked remortgage is a way in which to avoid the SVR altogether. Simply by taking advantage of new mortgage deals you could maintain your same mortgage rate or, as is more often the case, improve on it.

So, rather than rethink in response to the new rules, simply think about remortgaging.

The team at Complete Mortgages always makes contact with its clients three to four months before they’re due to begin the SVR, to a) alert them to this fact and b) present them with new mortgage deals.

All good mortgage brokers should be doing this. If yours doesn’t, then you need to be asking them why. If you don’t use a mortgage broker, then maybe its time to look into finding one that can proactively ensure that you’re not missing a trick.

Back to the new mortgage stress test rules, then. Whilst the BoE has introduced tougher lending rules that stress test at 3% above the lender’s SVR, the reality is that if you proactively manage your mortgage you may never even have to face the SVR – let alone consider paying 3% above it.

For more in-depth information on what the new rules mean for you and how Complete Mortgages can guide you through the process, contact 01483 238280 or email info@complete-mortgages.co.uk. Don’t forget, we also specialise in buy to let mortgages, adverse credit mortgages, limited company buy to let mortgages and first time buyer mortgages.

By Mark Finnegan, Director at Complete Mortgages