How to get the best Remortgage Deal’s
View our user-friendly fact sheets to help you make your own decisions about your mortgage today
In the next twelve months an increase in the base rate of interest is highly likely. Rising house prices caused by the government’s Help To Buy scheme have reached levels that are causing alarm at the Bank of England and a rate rise is the only measure that can slow them down.
Home owners may be considering remortgaging in the coming year before rates rise, and this article is a quick guide to help borrowers think about how to get the best deals they can.
There can be real benefit to remortgaging, such as saving money, releasing equity for home improvements, or gaining the security of a low fixed rate for the future.
Rates are potentially as low as they are likely to go, and interest rates will eventually start to rise. It generally makes sense to review your options now and take advantage of the low rates that are available.Can I get a Mortgage?
The rate you are offered will be based on the degree of risk your home loan presents to the lender, amongst other criteria. Lenders calculate the degree of risk based on the size of the loan compared to the size of the mortgage.
If you are buying a £100,000 property and you can cover the first £50,000 yourself or with help from family members, you will need to borrow £50,000.
This means your Loan To Value (LTV) is 50%, and the closer the LTV is to one, the higher the risk and the rate of interest will rise accordingly.
Everything you can possibly do to bring the LTV down will help as it will make you more attractive to lenders, save you money in the long run, and put you on a much more stable financial footing in your new home.Can I get a Mortgage?
If you haven’t been to see a mortgage advisor in a few years, you’ll notice a big difference as the rules surrounding borrowing have become far stricter since April this year.
The horror stories of irresponsible lending before the 2008 crash, combined with the government’s massive help to home owners with Help To Buy have led regulators to impose stringent new borrowing rules.
Expect your mortgage advisor to want to see your entire financial history, bank records, confirmation of employment, savings, credit reports and more.
Pay off any outstanding debt, even if it’s just £50 on a store card, any black marks on your credit score could be potentially fatal when it comes to securing a lending decision.Can I get a Mortgage?
In Britain there are, in general, three types of mortgage deal commonly available, and these are fixed rate, variable rate and tracker mortgages.
A fixed rate mortgage offers borrowers a degree of security, it means that if the base rate of interest rises in the future, the lender will continue to offer the rate that was set and that offer will typically run for five years. It is a way of future-proofing your mortgage against sudden and unexpected mortgage rises and typically most people choose them.
Variable rates have been popular in the last five years. Whereas fixed rates are ‘fixed’ at higher levels to enable the lender to get as much out of the deal as the borrower (arguably more), a variable rate simply responds to the Bank of England’s base rate of interest.
When the base rate is low your mortgage is cheap, and when the rate is high, it’s more expensive. Rates have been half of one percent for six years but this is likely to end soon, leaving many variable rate borrowers seeking fixed rates.
A tracker mortgage is similar to a variable rate mortgage, as it follows the base rate set by the Bank of England but at agreed set margin (perhaps one percent), meaning that a one percent rise in the base rate will not result in a three or four percent rise from your high street lender.Can I get a Mortgage?
If you’ve already got a mortgage and you are thinking about protecting your wealth against future changes in the economy it is important to see this as part of your long term financial strategy.
If you are unsure about what next steps to take with your remortgage or would like to speak to a financial advisor.Can I get a Mortgage?