With rising interest rates and the soaring cost of living you may be asking should I remortgage now? By remortgaging onto a fixed deal now you may be able to cut your monthly mortgage payments and gain protection against further interest rate rises. But what do you need to consider when it comes to remortgaging and is now the right time to do it? We’ve put this article together to explain everything you need to know.
How do rising interest rates affect mortgages?
So you might have heard that interest rates have been on the rise. In fact the Bank of England has raised the base rate four times since December 2021 taking it from 0.1% to 1%.
But how does this affect mortgages? If you’re on a tracker mortgage and the base rate increases your monthly payments will go up automatically. While if you’re on your lender’s standard variable rate the rate you’re on can change at the lender’s discretion. So they could pass the full increase on, some of the increase or none of it. And they could even increase it by more if they want.
However if you’re on a fixed rate mortgage at the moment the amount you’ll pay each month won’t change until your deal ends.
How can I protect myself against interest rate rises?
If you’re on your lender’s standard variable rate or a tracker mortgage and you remortgage onto a fixed rate deal you’ll lock in the rate you’ll pay for a fixed period, such as 2, 3 or 5 years.
Although bear in mind that as interest rates have been increasing we’ve seen the rates available on fixed rate mortgages creeping up too.
So with many experts predicting the base rate may rise further this year if you’re asking should I remortgage now it could be the right time. The good news though is that there are still some great rates available. But these could disappear fast so if you want to remortgage then you should act quickly. One way to speed up the remortgage process is to speak to an expert mortgage adviser. They’ll explain all your remortgage options and answer any questions you have. That way you’ll be well placed to make a quick decision if you want to go ahead and remortgage.
Should I remortgage: How much could I save?
We’re all trying to slash our spending right now as we face soaring living costs and many of us are asking should I remortgage? Your mortgage is likely to be your biggest outgoing so if you can save cash by remortgaging this is likely to be at the top of your list of reasons to remortgage. But when you’re considering should I remortgage how much could you save? Well this will depend on the rate you’re on at the moment and the new deal you’re able to get. Plus you’ll need to factor in any other costs too including whether you would need to pay an early repayment charge if you remortgage.
However you don’t need to get your calculator out and start crunching the numbers yourself because this is where an expert mortgage adviser can help you. Our team of remortgage experts will talk you through your options and explain any savings and costs.
My fixed deal is ending, what should I do?
It’s a good idea to start shopping around for a new deal now if your current mortgage deal is due to end in the next few months. This is because you’ll be moved onto your lender’s standard variable rate when the initial period of your mortgage ends. And this could result in quite a jump in your monthly payments.
But if you remortgage onto a new deal and time it right you’ll avoid this happening. So if you’re looking at reasons to remortgage this is another benefit. It’s advisable to start looking for a new deal 3-4 months ahead of your current deal ending. Not only will you be able to lock in a deal but having extra time will cut the risk of you rolling onto your lender’s standard variable rate if your remortgage ends up taking longer than you had thought.
If you want to find out more about remortgaging please don’t hesitate to get in touch. Our advisers are remortgage specialists and are happy to answer all your questions.
You may have to pay an early repayment charge to your existing lender if you remortgage.