Purchasing a property with a mortgage is how most buyers finance their investment, however the type of product buyers choose varies HUGELY. Everything from your deposit, the risk of the property you are buying and how long the length of borrowing can affect your deal. And as with most things, timing is key. If you took out a mortgage when interest rates were high you may be wondering if there is a way you can lower your repayments. Here we look at whether now could be a good time to remortgage and how to go about it.
Why Should You Care About The Base Rate?
You may have heard of the term base rate and be unsure exactly what this is and how it can affect you as a property buyer. The base rate is set by the bank of England as a way to control inflation and determines interest rates for savings and loans, this includes mortgages. When the base rate is high, fixed rates on mortgage products tend to increase, making them less appealing to buyers. Due to timing sometimes buyers can get stuck with high monthly repayments to fund their purchase.
Since 2021 the base rate has slowly been rising as a response to inflation, peeking at a stonking 5.2% back in August 2023. The good news is it is finally on the way back down to around 4.25%. This is great for buyers taking out new mortgages however what if you have been on a fixed rate, is it time to switch? Maybe, keep reading.
What Other Factors Affect Whether It’s A Good Time To Re-mortgage?
Switching mortgage products is not a what shall I have for dinner type decision. It requires some thought. Here are some of the factors to ponder;
When does your deal run out?
Understanding when your deal runs out is important as if it is not coming up anytime soon, there may be a repayment charge in order to release yourself. You would need to get financial advice on whether this will make sense in terms of what you will save by lowering your repayments.
Nothing Is certain
If you are considering going from a fixed to a variable, remember nothing is certain. So interest rates could also go up as well as down, depending on your risk appetite and budget requirements you may prefer the comfort of staying or switching to a new fixed mortgage.
Other costs
If you are choosing to re-mortgage, make sure you take into account other costs that can be involved. This includes lending fees and conveyancing fees. Choose a specialist remortgaging solicitor to support you through the process and ensure your interests are protected. Waterstone Legal offer a reassuring fixed-fee on their remortgaging service.
So, How Do You Re-Mortgage?
If you are thinking now is a good time for you to remortgage here are the steps to make it happen;
Check the details
First up, check the details of your current mortgage. What are your monthly repayments, when does it expire and what early release fee is there? Understanding this information is key before going any further.
Speak to lenders
The next thing you need to do is research and speak to lenders to have an idea of what products are out there. Consider all your options and the risks and benefits of what various mortgage products provide to make an informed decision.
Choose a conveyancer
Find an expert mortgage conveyancer who offers a fair price to cover the legal expenses before proceeding with the mortgage. Choosing a solicitor who is on the approved lenders panel can help give you peace of mind and make the process as quick and smooth as possible.
The Wrap Up
Whether or not you choose to remortgage is a personal decision. Taking advantage of lower interest rates can benefit you if you took out a mortgage during the time the base rate was high. Whether a switch is a good idea depends on your current repayments, risk assessment and whether the costs involved do not outweigh the benefits. If you do decide to go for it, make sure you do your research and have an expert conveyancer by your side to go over the details and protect your interests.
2025 could be the year you save big, good luck.
