MoneyMagpie

Apr 27

Remortgage and make the most of the cheapest mortgages ever

Did you know you could remortgage right now and save thousands on your home loan?

Read our guide to remortgaging to make sure you get yourself the best deal you can, particularly now that the cheapest cheapest mortgage EVER is now on the market.

 

Remortgage

 

the incredibly cheap mortgages on the market now

Magnifying glass highlighting one house of many

The base rate is the lowest it has ever been in history.

Not only that, as the housing market cools off and fewer people take out mortgages, there’s a lot of competition between mortgage lenders right now and they’re fighting each other to come up with the cheapest loans for home-owners and home-buyers.

In fact, Yorkshire Building Society has just brought out the cheapest ever mortgage. Its rate is 0.89% and it’s fixed for a couple of years. However, you can only borrow up to 65% of the value of the property and there’s a steep arrangement fee of £1,495. So it’s not right for everyone by any means. However, it’s shaking up the mortgage providers and they will have to come back with their own cheap rates too.

This is really good news if you’re looking to save money on your mortgage, it’s highly likely that you can do so right now, just by moving your loan to another company or simply moving it to another product with the same company (that’s often the cheapest option).

In fact if you would like to see just how much you could save by moving your mortgage, get in touch with our award-winning mortgage brokers London and Country now.

 

Should i go for a fixed-rate mortgage?

Someone using calculator in background and house model in foreground

As rates are really low, it’s probably a good idea to remortgage to a fixed rate – even one that is fixed for five years if you can find something that’s really, really low.

 

Here’s what you need to consider:

  • If your current mortgage deal is coming to an end and you have moved onto your lender’s standard variable rate (SVR) then fixing it at a really low rate – either with your current provider or with another company – could be a good option for you now. The question is, do you go for a one or two-year fixed rate or a longer five-year or even ten-year fix?
    • While shorter-term (two year) fixes often have better rates, they usually incur larger remortgage fees and will leave you searching for a new deal at a time when the rates are likely to be higher.
    • A five-year fix might seem expensive now, but it gives you more security against rising interest rates  and could well save you money in the longer term. However, this assumes that rates will go up in the next few years. With Brexit there’s a lot of uncertainty about the economy. If that struggles in the next couple of years then rates might go down even further.
  • If you are one of those lucky people already on a tracker mortgage taken out a while back which pays base rate plus about 1%, then fixing might not be worthwhile for you. The base rate would need to rise by at least another 1% or so for you too be worse off than on a longer term fixed rate deal at the moment. Stay with what you’ve got – don’t remortgage if you don’t have to!
  • If you are remortgaging because you are moving home, remember that the very best deals are still available only to those with larger deposits – 25% or more – so make every effort to save as much as you possibly can – that will save you money in the long term.

 

Why should I remortgage?

There are three different reasons for remortgaging:

1.  When you want to switch to a better deal.

Woman shaking hands with banker

This is when you transfer your mortgage from one company to another, or change it to a different type of mortgage with your current lender.  It is what you should do when you come to the end of a fixed deal.

When you remortgage at the end of a fixed deal, the balance of your mortgage remains the same as you are just transferring to a deal with a different rate of interest.

This is something that anyone with a mortgage should be thinking about right now. In fact, even if you’re not out of your fixed term, it might be worth paying the ‘early redemption penalty’ and remortgaging just because there are such good deals around right now.

Speak to London and Country to see how much you could save by remortgaging.

 

2. When you are moving house.

Young couple unpacking moving boxes

Often you will have to remortgage in this instance because the value of your new property is more than that of your existing property. It will involve switching deals in the same way as we’ve explained above, but the balance of your mortgage will change.

Even if your lender will allow you transfer your existing mortgage in theory, they will require a valuation of the new property to ensure all their needs are met.

 

3. When you want to release equity from your home.

Couple stressing over finances

This is when you take out a larger mortgage in order to borrow extra money with which to pay off other debts. We advise against this wherever possible – see our article on remortgaging to pay off your debts to find out why.

This article deals with the first type of remortgaging: those who are coming to the end of their fixed term period (where interest rates remain the same rate for a fixed amount of time) and are facing higher interest rates unless they change mortgage. Bear in mind that many of the same rules do apply for those remortgaging to move house too.

 

How to remortgage: three simple steps to get the best deal

1. Start looking before the end of your fixed-term.

Man searching for a mortgage on his phone

If you’re coming towards the end of your fixed-term period, start looking straight away. You can arrange a remortgage up to six months before the end of your fix – and because the good deals are snapped up so quickly at the moment, arranging it early is the best thing to do.

Waiting until the end of your deal will mean you’re put on your lender’s standard variable rate (SVR) which will undoubtedly be more expensive.

 

2. Get a broker

couple meeting with mortgage brokerA good mortgage broker will search across the market for you (not just a few companies that they are tied to) and be able to find you the best deals on offer.  MoneyMagpie recommends L&C because:

  1. They search across the market to find you the best deal for your circumstances.
  2. They have access to over 90 lenders and even offer exclusive deals you can’t get anywhere else.
  3. They have won more awards than any other broker.
  4. Their expert mortgage advice service is fee free.

So have a chat to a L&C advisor to see what deals they can find you.

 

3. speak to your current lender

Couple meeting with the bank

If your broker does find you a great offer, you should also consider having a chat with your current provider to see if they can match the offer.  They won’t always be able to – but if they do, you can avoid the (sometimes excessive) exit fees that are involved with changing your mortgage provider.

 

4. consider over-paying

How to make money fast and easy

If you find a cheaper deal than the one you have currently, you could consider continuing to pay the same amount as you were paying before (in other words – over-paying) so that you can pay off your mortgage quicker and save yourself even more money in the long-run!

 

How much will it cost?

Someone working out finances or budget using a calculator

The costs that you will have to fork out for straight away are

  • The arrangement fees for the new mortgage (although some companies might waive these just to get you on board)
  • The exit penalties on your current mortgage.  It’s likely that you won’t be charged anything if you are out of your ‘fixed rate’ period, but some lenders will charge you a £750-300 ‘administration fee’
  • Early repayment charge. If you are still in the fixed-rate period you will typically be charged 1-5% of the value of the early repayment.

 

arrangement fees

Arranging coins next to cut out house

More recently, arrangement fees have become a tool to manipulate comparison tables. By offering a lower rate of interest but high arrangement fees a mortgage provider can get up high on comparison tables. They then make the money back by hiking up arrangement fees.

This can work to your advantage: if your mortgage is over £200,000 you’ll probably save money by paying a higher arrangement fee and then lower interest. However under £200,000 it’s probably better to go for a slightly higher interest rate to save on arrangement fees.  For more information on cost see our article on mortgage set up costs.

 

What if you can’t get something you can afford?

 

Couple comparing bills on a laptop

If you find that either no one will offer you a new mortgage or the ones you are being offered are simply too expensive, then you have two choices.

Firstly you will have to be resourceful and try to make more money out of your house in order to be able to afford it, or, if this is not possible, you should seek help and advice from debt and housing charities.

 

Make money from your home

Room for rent sign

There are two big ways to earn from your home. You can rent out your driveway, garage or parking space, and if you live in the right area it can make you as much as £17,000 a year. Alternatively, try renting out your spare room which can make you a tax-free income up to £4,250 a year.

For more money-making ideas check out our most popular article – 10 easy ways to make quick cash. 

 

Seek help quickly

Couple having a meeting with a financial advisor

Don’t bury your head in the sand if you really are facing a problem. There are plenty of free services out there to help you, so make the most of them as soon as you think you might be struggling.

  • Citizens Advice Bureaux (CAB) which provide free, confidential and independent advice from thousands of locations in the UK
  • StepChange is a debt charity offering an online debt remedy service and free debt advice in person or on the phone.
  • Nationaldebtline is a website offering a guide to dealing with debt – and has some useful sample letters for writing to creditors.
  • Payplan is a free debt management company funded by the credit industry, which makes repayment arrangements
  • Shelter is a great resource if you are having problems with your rent or mortgage. They can stop you being turfed out of your home, even if you’re about to go to court.

Try any of these organisations for free help with budgeting, dealing with your creditors, keeping the roof over your head and getting out of debt and into wealth again!

You can find out here how to get free, impartial help to get you out of debt and help you keep your home.

 

Act now

Talk to independent brokers London and Country for a free quote

 

Compare Current Accounts

Experian Free Credit Score – MPU

Experian Free Credit Score – Full article

WHAT DO YOU THINK?

4 thoughts on Remortgage and make the most of the cheapest mortgages ever

  1. Unfortunately your contention that L & C trawls the whole market is not correct.
    They are good though.
    They will not tell you who they don’t quote from but I did squeeze some info from them such as Direct Line and Yorkshire Bank I think.and HSBC.
    However there are still no mortgage brokers out there who will quote from the WHOLE MARKET.
    So you still as a consumer have to do further donkey work to cover the whole market which is a real pain.
    Granted L & C do most but not all. Rmember you can call yourself a whole market broker if you quote a certain amount of products.
    You need to deternine what the FSA criteria is for a broker to call themselves a whole of market broker.
    This might be picky but a consumer would think that a whole of market broker is exactly that; but as in the case of most things in life this is not the case.
    This just causes additional work for the consumer to ensure they are researching the WHOLE MARKET>.
    I believe the info about WOM classification I saw in the Telegraph money section.

    Reply
  2. Hey there i loved your article and just wanted to take 5 mins of my time to say thanks it was just what i was searching for anyway keep up the good work and youll see me soon:D

    Reply

Add your comments here

Related Articles

Experian Financial Control – Full width

 

Make Money and Save Money

ideas for everyone
 

Send this to a friend