New year, new mortgage? With approximately one third of all home loans made in the UK being remortgages, it appears that you wouldn’t be alone if you’re considering streamlining your property debt in 2019. Keeping a close eye on the mortgage market (and intermittently reviewing your current rate) is more important than ever, with several mortgage lenders promoting impressively low interest rates alongside deals which could save you thousands.
There’s a common misconception that remortgaging is expensive, but in reality it doesn’t have to be. “Mortgage lenders are currently reviewing interest rates, offers and incentives on a near-weekly basis, meaning now could be a great time for landlords to consider a financial review of their property portfolios,” Mark Hughes, Financial Services Director for Leaders, explains.
He continues, “As the property market continues to evolve to reflect our ever-changing economy, mortgage lenders are offering several incentives – including cashback – meaning remortgaging could become a feasible option for many multi-landlords. Lenders are working hard to establish options for investors, with many people finding that any fees incurred as part of their remortgaging process are recovered.”
Here’s some of our top reasons for considering a remortgage this spring:
Remortgaging can save you huge sums of cash
As a nation, we’re great at spending money, with many of us shopping around for the best deal before committing to a large purchase like a holiday or new car. So it’s surprising to find that many of us don’t apply the same notion when shopping for a mortgage deal, despite it being arguably the largest financial commitment we will ever take on. Therefore, streamlining this debt can be imperative if saving money in the long run is high on your list of priorities. With the right advice and exposure to the best mortgage products, one simple remortgage could save you £1,000s every year, moving forward.
Why should you remortgage?
For many people, the primary reason is to save money, particularly if you’re a landlord with more than one buy-to-let mortgage. But there’s a few great reasons, including:
- Your current deal is about to expire. The typical length of mortgage deal on a fixed, tracker or discounted rate is between two and five years. Therefore, when this comes to an end, you’ll likely want to avoid reverting back to your mortgage lender’s standard variable rate. The chances are, this rate will be higher than your previous rate and more expensive than new deals on the market. Our advice? Start searching for new deals around four months before your tariff ends.
- You’re after a better rate. If you’re tied into an initial deal then you may be entitled to pay an early repayment charge, or redemption penalty. This can often be costly – anywhere between 2% and 5% of your outstanding loan. However, this doesn’t mean you should discount shopping around for a better rate as the savings on a new tariff can be huge, particularly if you have a high loan to value (LTV).
- Your property is worth substantially more than when you agreed your mortgage. If your property’s value has skyrocketed since you took out your mortgage, you’re definitely missing a trick if you haven’t already searched around for a better mortgage deal. The chances are, you could find you’re now in a lower LTV band, meaning you’re eligible for cheaper monthly repayments.
- You’re concerned about interest rates rising. With confusion around the effects of Brexit still circulating, many people are considering the possibility that base rates are likely to rise once more. If the Bank of England base rate rises, this could affect your monthly repayments, specifically if you’re on a tracker rate, so shopping around for reasonable fixed rates could be worth considering.
- You want to borrow more. If you’re considering ways to expand your property portfolio, remortgaging some or all of your current mortgage deals to a new lender might just mean you can raise funds by paying lower rates across your portfolio. However, it’s important to keep note of the fees you’re expected to pay by doing so.
If it sounds like remortgaging could be the right move for you, we recommend you start searching for a new deal as soon as possible, to ensure it’s locked in ahead of any interest rate rises.
For impartial advice on buy-to-let mortgages, or to explore your remortgage options, make an appointment with one of our experts, here.