The cost-of-living crisis has given homeowners one gigantic reason to consider remortgaging – so how could it help you?
You don’t need us to tell you these are challenging times. Prices are going up everywhere and wages aren’t going up at anything like the same rate. So could your home help you out of a hole? Here’s why remortgaging now could be a very, very smart move.
1. Because prices are going up
We’re all seeing the same scary predictions about energy costs this winter, but it’s not just energy. Fuel prices may be off their recent peaks but they’re still close to 50% higher than what they were this time last year. Everything from food to clothes to your Amazon Prime subscription have increased in price recently too.
Remortgaging won’t lower those prices, but it could ensure you have more available cash to cover them. If your mortgage is on the current standard variable rate (SVR - that is, the rate you get if you’re not on a discounted deal), we’ll almost certainly be able to save you money. But even if you’re locked into a deal, you may find that paying the penalty to escape it in favour of a better deal could still be worthwhile. It’s worth having a chat with us to see what your options are.
2. Because interest rates are going up
The Guardian recently reported that around one million homeowners are on the SVR. As long as interest rates are low, that probably doesn’t present too much of a problem (although you’d still usually be better off fixing). But interest rates aren’t as low as they were. In recent months the Bank of England has increased the base rate five times, taking us from 0.1% to 1.75%. Some are predicting it will be at 2.6% by the end of 2023. As a result, the SVR has increased too. At time of writing (August 2022) it’s at 4.65%. it could be closing in on 6% by the end of next year.
Remortgaging now could not only save you money now but protect you against further increases and help you ride out the current situation with a relatively attractive deal until (hopefully) things look a little brighter in a few years.
Remortgaging now could not only save you money now but protect you against further increases and help you ride out the current situation with a relatively attractive deal until (hopefully) things look a little brighter in a few years.
3. Because you could use your remortgage to consolidate debts
What if the current price rises have already exhausted any savings you had and you’ve been using credit cards to make ends meet? Remortgaging could help you press reset. By rolling up credit card and other debts with your mortgage, you’ll get the chance to start afresh, with just one payment to cover everything.
It’s important to realise that this isn’t the cheapest way of doing it, but you will be able to spread the repayments over a longer period.
4. Because you could use your remortgage to release equity
Equity is the difference between the value of your home and the amount you still owe on it. If you’re a good few years into your mortgage, the combination of rising house prices and repayments will mean you’ve probably built up a significant pot of equity in your home.
Remortgaging could help you access that pot, and you can then use the money to fund home improvements, buy a car, take a holiday or simply act as a rainy day fund to ensure you can manage over the next few years.
5. Because you could reduce your term
When most homeowners become homeowners for the first time, their circumstances are very different to those a few years down the line. As the years progress and their income increases, there should be a little more money available to pay down the mortgage faster. The faster you can pay off your mortgage the less interest you’ll pay and the quicker you’ll be able to enjoy more of your disposable income.
That’s not all. If you’re one of the many people who’s never remortgaged, you could find that switching to a lower rate could help you pay off your mortgage faster without paying any extra each month, because more of your money is being used to pay off the mortgage rather than pay interest.
So even if you can’t afford to pay more, you could find paying the same with a better deal could help you save thousands in the long run.
6. Because you may be able to lock in a deal now even before your deal has finished
You’ve always remortgaged when your existing deal ends. You’d remortgage now, but your existing deal still has a few months to run.
What you may not realise is that you may be able to lock in your next deal now at lower rates and start paying once the existing deal expires. We can help you find deals you can take advantage of now.
Any deal will do?
Not all remortgage deals are the same. In addition to the monthly payment, you may have an arrangement or product fee, and if you’re currently locked into a deal there’ll probably be an early termination fee to pay too. You may not have to pay all those fees up front – you could add at least some of them to the mortgage, but they can be the difference between a remortgage that seems like a good choice and a remortgage that really saves you money.
That’s why it’s so important to talk to an expert. So to find the right remortgage for you, talk to us.
If Covid has left your finances in a state, is remortgaging the answer to getting things back on track?
If the past few months have left debts creeping up, the news of a second lockdown was probably the news you’ve been dreading. So how should you approach your mortgage in the current environment? Here’s some Key advice…
The simple rule of thumb right now is that, whilst there is some help available from lenders, you should only take it if you really need it. The government asked lenders to ensure that taking a mortgage payment holiday wouldn’t affect credit ratings, and lenders agreed. But there is some suggestion that taking a break could affect you when you come to remortgaging. That’s especially true if you’re planning on remortgaging soon. So if you can pay, pay
You can usually manage your mortgage payments perfectly well, but perhaps you’ve been furloughed or work has dipped over the past few months and you need a break to keep things on track (and keep mounting debts at bay). Now may be the time to consider a payment holiday.
All lenders are offering holidays and the news of the second lockdown also brought news that the arrangement has been extended for a further six months. Once the holiday is over, your payments will be recalculated over the remaining term – so your monthly payment will go up. If you haven’t already had six months of holiday, you can ask for them now (usually in two blocks of three). If you don’t need a full holiday you can ask for fewer months, or you can take the full holiday and pay off an amount you can afford each month.
*BUT, and this is really important, there’s an issue with payment holidays and it all depends on your circumstances. If you know your current change in circumstances is temporary and things will be back to normal(ish) post-Christmas, a holiday may work for you assuming you can resume payments at the increased rate.
If, on the other hand, you already suspect that you won’t be able to pay the full monthly mortgage repayment come the end of the holiday, then taking the break may not be the best solution.
That’s because a payment holiday won’t bring your payments down for the long term – it will put them up. But a remortgage could be the answer, and help you put a stop to rising debts.
There’s lots to recommend remortgaging right now. If you are struggling to meet your outgoings, remortgaging could help you by:
This is where the payment holiday issue can come into play. Any lender is going to want to know that you can afford your repayments. A recent payment holiday could increase the level of lender doubt. Even if it doesn’t affect your overall chances of approval, it might mean you can’t access the very lowest rates.
On the positive side, lenders are offering good rates on mortgages with a loan to value (LTV) of 85% or less (that is, your mortgage is at or below 85% of the value of the property). With house prices shooting up over the past year, most homeowners have found their LTV improving, which should make remortgaging easier.
Mortgage lenders won’t usually agree a mortgage where you don’t currently have an income. If you’re struggling to pay your mortgage and have already had your six month payment holiday the FCA is advising homeowners to talk to their lender about a tailored support plan.
Not without checking the rest of the market first. Often, people assume that, because they already have a mortgage with a lender, they’ll have some sort of advantage in the application process. But that’s not the case – every mortgage application is taken as a fresh start and it doesn’t matter whether you’ve been with a lender for 15 years or five minutes.
It’s also worth remembering that independent mortgage advisors like Key Mortgage Advice can access rates the general public can’t. So even if your current lender is offering what looks like a great deal, the chances are we’ll be able to better it.
To find out whether remortgaging could work for you – and to increase your chances of being accepted for the lowest possible interest rate, talk to us.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage
With everything that’s going on right now, we wouldn’t blame you if your mortgage wasn’t really top of your priority list. If you’re worried about your finances taking a bit of a hit over the coming months, though, remortgaging could be the perfect way to ease your financial burden.
We have same-day and next-day appointments available, and we’re able to do all appointments over the phone.
We don’t need your original documents or ID. Everything can be emailed to us or uploaded to our client portal, so there’s not even a trip to the post office involved.
That’s right: you don’t even have to change out of your pyjamas.
Interested in remortgaging? Book your free consultation with our expert team today!
New research by consumer group Which? has found that less than half of UK homeowners know the exact mortgage rate they are paying. Over a third of those surveyed had no idea at all what rate they were on. Only 27% of people were able to recall their exact mortgage rate and 25% were found to be on SVR mortgages - a statistic which is worrying, at best.
SVR mortgages (standard variable rate) are mortgage providers' standard deals, which you are put on once the introductory period of your mortgage comes to an end. The rate varies from lender to lender and is affected by changes to the Bank of England's base rate, among other things. Most importantly, however, it is almost always significantly higher than the rate you were originally paying. The survey by Which? gave Clydesdale Bank as an example. They offer a market-leading initial rate of 1.79% during the introductory period, but then the rate jumps up to 5.2% (variable). That stands above the average SVR mortgage rate, which (according to Moneyfacts) is 5.11%.
Researchers looked at what this would mean for a person who bought a house at the average UK price (£231,422) on a 90% LTV mortgage. Paying back a £208,279 loan over a 25-year term, they could pay as much as £347 a month more once the introductory period is over and they lapse onto the SVR. This would cost them more than £4,000 extra per year!
Anyone who has come to the end of a fixed term (usually 2 or 5 years) and hasn't remortgaged is likely to be on their lender's SVR. A shocking generational disparity shows that almost twice the number of those in the 60-69 age category were on SVR mortgages (34%), compared to just 18% of 25-34 year-olds.
Our Director, Sharon Duckworth, says: "It's worth checking to see if you're on an SVR mortgage, as you could be wasting money. The market is very competitive at the moment and there are some fantastic mortgage deals for homeowners to take advantage of."
Which? found that, of those who had had their mortgage for more than 5 years, only 50% said they were happy with their deal. Alarmingly, 41% of all homeowners on SVR mortgages said that they would be "unlikely to switch if they came across a cheaper deal today". Reasons given for not switching from SVR to a better deal were that “it wasn’t worth the hassle” and “they hadn’t thought about it”. However, only 17% though that it "wasn't worth their time".
Today, other types of mortgage deals offer much lower average rates, including fixed (2.98%) and tracker (2.81%). Compared to the average SVR (5.11%), they offer exceptional value.
If you're thinking of remortgaging, it's worth speaking to a whole-of-market advisor, who will have access to all of the best available deals. Key Mortgage Advice are one such advisor, with offices in Preston, Garstang and Southport. You can arrange a free mortgage consultation with us via phone, email, or by popping in to see us. All of our contact details can be found on our Contact Us page.
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To save time and make it easier for you to find out if we can help with what you're looking for, we thought we'd list our services in a handy little blog!
For our new followers, keep reading to find out how Key Mortgage Advice can help you with finding the best possible deal, whatever your needs and circumstances:
Whether you’re looking for your first or fifth property, we can help you get the right mortgage. Every lender has a unique set of policies and criteria, which must exactly match the circumstances of the borrower. Therefore, arranging a mortgage has never been more complex. Our wealth of experience and knowledge of the underwriting criteria for each individual lender allows us to successfully direct applications and complete on over 95% of all mortgage cases. We have access to the whole market of mortgage products, meaning we are truly independent and will help guide you to the most competitive and suitable mortgage product for your circumstances.
Many lenders now offer discounted interest rate deals for an introductory period – normally for two, three or five years. At the end of the introductory period, they’ll usually revert to a higher rate. However, that doesn’t mean you have to stick with the higher rate; like most things nowadays it is important to shop around to see if you can save some money. If you want to know more about how we can help you to save money on your monthly mortgage payments, or to swap to a better interest rate, then contact us and we’ll see if we can get you a better deal.
If you’re a homeowner, you may have seen the value in your home increase over time. Lifetime Mortgages allow you to tap into some of this value and release a cash sum. A lifetime mortgage is designed for people over the age of 55 and allows clients to either buy a new home or release money from their current property without the need to make any monthly repayments during the lifetime of the loan. This is because the loan and interest are rolled up and repaid by the sale of your property when the plan ends; this is normally when you die or move into long-term care.
In many cases, we can visit you in your own home or, if you prefer, we can provide a telephone consultation. If you wish to proceed with a recommendation, we offer full support with the mortgage application, legal forms and completion matters to ensure the process is as straightforward as possible. In addition, we will offer you our full support going forward, should you require any further advice.
Buy-to-let mortgages are specifically designed for investors who want to buy a property and rent it out. These are usually more expensive than normal mortgages, but they could help you to become a property investor. If you don’t own your own home outright, or with a mortgage, finding a buy-to-let mortgage may be difficult.
Most buy-to-let mortgages are interest-only, meaning that you won’t be paying off the mortgage itself and you’ll have to pay the outstanding capital at the end of the mortgage term. The other key differences from normal mortgages include:
However, any rental income you earn from a property can be offset for tax purposes against the interest only mortgage payment, so owning buy-to-let properties can be a tax-efficient investment product.
Since March 2016, buy-to-let mortgages have come under greater scrutiny. New affordability tests were implemented which mean that older home-owners may struggle to get a buy-to-let mortgage as lenders often require borrowers to repay the whole loan back before they retire.
Obtaining a commercial mortgage relies heavily on the attractiveness of the proposition to a lender. Therefore, the involvement of an experienced and well-connected advisor is hugely important. As independent specialists, we negotiate business mortgages with a range of lenders including major banks, commercial building societies, regional and local building societies, and specialist commercial asset lenders. The appropriate commercial lender is purposefully selected to meet your needs. Terms for business mortgages are not set in stone and our role in the transaction is to negotiate the best mortgage rate and terms. Our wealth of experience and market knowledge means we understand what is likely to be achieved given a specific set of circumstances. We are able to assist with transactions for purchasing premises to trade from or for investment opportunities for commercial landlords.
In addition to the services listed above, we can also assist and advise on a whole host of other products, including:
If you need expert advice on any of the above, click the button below and book a free consultation with one of our expert advisors:
You may have seen the term "mortgage prisoner" used in newspapers recently, to describe unfortunate homeowners who want to remortgage but do not meet the criteria to be accepted for a new loan.
Back in 2014 and 2016, changes were made to the way lenders assess mortgage affordability. Rather than being based on multiples of your income as it was previously, lenders now look at your income and your outgoings, assessing your ability to keep up repayments should interest rates go up or your personal circumstances change. This means that some people who took out a mortgage loan before the criteria changed, now find that they are not eligible for a new deal. They then get moved onto the lender’s standard variable rate (SVR) when their current deal ends, which is typically more expensive. Hundreds of people have found themselves in this position – paying more than they need to and sometimes struggling to keep up with the increased payments.
There are many reasons you might want to consider remortgaging. Maybe your existing deal is about to end, you might want to borrow more, or you might just want a better interest rate. However, you may find that it’s a struggle to find a new deal, for several possible reasons.
We’re a leading mortgage advice service in the north-west, with offices in Preston, Garstang and Southport. We’re a completely independent mortgage advisor and we have access to the whole of the mortgage market. Even better, in most cases, our advice is completely free!
So, whether you’ve found yourself to be a mortgage prisoner or you're just looking for a great deal, get in touch and we’ll help you!
Around one in three of all mortgage loans taken out are for the purpose of remortgaging – A remortgage being the acquisition of a second mortgage loan, often used to replace an existing mortgage or borrow money against the value of a property.
The most common reason for someone to consider remortgaging is that they could be saving money by switching to another mortgage provider. However, many people are still reluctant to shop around for a new mortgage, despite it often being their biggest financial commitment. That being said, there are certain circumstances which regularly prompt people into action:
If you took out a fixed-rate mortgage when you purchased your property, the end of your initial term is the perfect time to consider remortgaging. The initial term will end after 2, 3, or 5 years, depending on the deal you agreed with your lender. Once it has ended, you will be switched to your lender’s standard variable rate (SVR) which could see you paying a higher rate than you were before. If this is the case, it’s worth shopping around to find a cheaper deal.
You might be considering a remortgage because you’ve seen better rates advertised. It’s important to bear in mind that some mortgages have early repayment charges (sometimes called exit or admin fees), which may well offset any savings you’ll make by switching. Remember to take any additional charges/fees into account when calculating savings, and to contact your lender if you’re unsure as to whether you’ll be charged.
This should be possible without the need to remortgage. In most cases, your lender should be happy to arrange this for you if you contact them. Problems would only arise if you wanted to switch to an interest-only payment plan after agreeing terms for a repayment mortgage; in that scenario, your lender would likely be less accommodating. Either way, remortgaging is an option if your lender is unable to offer you the deal you’re looking for.
Sometimes, circumstances change and we find ourselves in a better position then we might have expected. If you’ve received a promotion or found a better-paying job, it makes sense that you might want to pay off your loan a little faster. However, not all lenders allow this. If this has happened to you, you may well be considering a move to a more flexible mortgage. Take into account any early repayment charges or exit fees on your current deal, and if it still seems viable, a remortgage could be the solution.
The Bank of England increased the base rate in November 2017, meaning those with tracker mortgages and those on SVR deals saw their rate rise by at least 0.25%. With talk of further increases to the base rate in the future, anyone wanting to avoid them might see this as a good time to find a fixed-rate deal. Remortgaging purely to avoid a speculated rate increase is somewhat of a gamble, it is recommended to speak with an independent financial advisor.
If you want to borrow more money but your current lender has denied your application (or offered terms you find unacceptable), remortgaging could be a good way to borrow more at a better rate. However, don’t forget to take into account those early repayment charges/exit fees. The new lender will want to know why you’re looking to borrow more, with home improvements and debt consolidation being the most common acceptable reasons. Be prepared to be asked for proof in the form of workman’s receipts or loan statements if you’re asking for a large sum.
If any of the above applies to you, or you’re unsure of whether you’d save money by remortgaging, contact us via the button below and we’ll talk you through it! We have access to the whole of the mortgage market and are positive that we can find you the best possible deal!
