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

Beware the SVR mortgage trap

Tuesday, 2nd October, 2018

This definitely sounds more sinister than it really is, however the standard variable rate (SVR) mortgage trap surprisingly affects a high number of people every year.

It’s a bit like household energy deals or ISAs: you are drawn in by the competitive rates, be they cheap – and fixed – energy or a high rate of interest for the first 12 months, only to find yourself paying twice as much for home heating or receiving half as much interest as soon as that period is over.

It’s arguably more difficult to overlook increases in your monthly mortgage payments than it is the rate of interest on your ISA, generally because the stakes are higher and the increases more noticeable, however people do tend to find themselves on the SVR and subject to higher monthly payments – and there’s really no need for it to happen at all.

When it comes to finding yourself on your lender’s SVR rate, there are two scenarios:

a) You’ve sorted the mortgage and you’ve lost track of when your preferred mortgage rate ends and the SVR begins – and your lender either hasn’t reminded you, or they have, but you’ve put off sorting it for another day

b) You use a mortgage broker and they’ve failed to remind you to consider your options as you approach the end of what seemed like the best mortgage deal when you took it out 18 to 24 months ago.

As a Guildford mortgage broker the advice we have covers both points, and that’s don’t just use a mortgage broker – but a good mortgage broker.

Firstly, using a mortgage broker doesn’t mean handing over money to someone who you feel does just as good a job as you. In return for getting a mortgage broker to apply for a mortgage on your behalf, you will be working with someone who’s qualified, bound by stringent regulation and who often has access to the best mortgage deals on the market at any given time.

More importantly, in the context of the SVR trap at least, it takes the responsibility of keeping on top of your mortgage off of you and places it firmly at your mortgage broker’s door.

Secondly, good mortgage brokers should know your mortgage as well – if not better – than you. As a result, they should not only be aware of key dates, such as the date your mortgage is due to switch to the SVR, but also proactively contacting you with a list of options when it comes to doing something about it.

That’s what we do, at least, and it’s an approach that prevents the majority of Complete Mortgages’ clients from having to experience the SVR.

Don’t get caught in the SVR mortgage trap. Contact a member of the team at Complete Mortgages on 01483 238280 who can manage your mortgage on your behalf and make sure that you’re aware of all the best mortgage rates available to you in advance. Alternatively, email info@complete-mortgages.co.uk.

Complete Mortgages’ Q&A on… remortgaging

Tuesday, 26th July, 2016
remortgaging

Thinking of remortgaging? Considering using a mortgage broker but you’re just not quite sure how – or why?

If so, read our Q&A, which features alongside other eminent UK mortgage brokers on Selling Up – the online estate agents guide.

Or, if a click is too far away, simply read the responses by Mark Finnegan, Director at Complete Mortgages, below.

How soon before my mortgage expires should I be thinking about remortgaging?

On the basis that most mortgage offers are valid for three months, my advice would be to start thinking about remortgaging around four months before your current deal ends. This will give you time to get all of your paperwork together and us time to source the best available product for you.

Remember, the mortgage market is exceptionally competitive at the moment and there is an abundance of ‘cheap mortgages’ available; for example, there are many five-year fixed rates that would see homeowners pay less than the current standard variable rate (SVR). As a result, it’s always worth keeping an eye on the market.

We contact all of our customers approximately four months before their deals end as part of our service, which means that there is no chance that they will absentmindedly ‘slip’ onto the lender’s SVR.

Is there ever an argument for remortgaging before the mortgage expires and paying an early repayment charge?

This really depends on what you owe versus the level of your early repayment charge, which can vary from 1% to 5% of the amount owing.  Either way, the larger the mortgage the more you will have to pay. More often than not the answer is “no”, but it is always worth speaking to a reputable mortgage broker that provides a free initial consultation. Professional advice is invaluable and will help you to make a fully informed decision.

What advice would you give about how to choose the right mortgage broker, and are there any red flags to look out for?

A personal recommendation by a friend or colleague is usually the best route.  If you are searching online, look out for a broker whose website clearly lays out their services and has good customer service ratings. In terms of “red flags”, I would say that a broker with an out of date website might not be very active in the market or as knowledgeable when it comes to the external factors that affect mortgage rates. Likewise, a good broker will offer valuable advice, recommendations and tips online. Read what they have to say and, if you like their approach, get in touch.