We all know that moving house can be a stressful and time-consuming process, not to mention a costly one. Between legal fees, stamp duty and removal costs, the bill can rack up at an alarming rate. Sometimes, there’s no alternative—a bachelor pad in Soho just won’t do for a small family. But if you have other motivations, such as lower repayments or home improvements, now could be a good time to remortgage instead of move.
When your current mortgage reaches the end of its initial fixed period, it’s important to reassess and check your product still suits you. The value of your home might have risen significantly, so you could be in a lower loan-to-value (LTV) bracket. Remortgaging could also free up funds for home improvements, adding value and enhancing your home without the hassle of a move.
The key reason now is a good time to remortgage is to take advantage of low interest rates. The Bank of England (BoE) base rate is currently sat at an historic low of 0.25%. If you took out a fixed-rate mortgage when rates were higher, and the fixed period is due to end soon, you could make savings by searching for a new mortgage product instead of letting your repayments revert to your bank’s standard variable rate (SVR). You can then continue to enjoy the security of knowing what your mortgage repayments will be.
And if you are currently on a variable rate, this could be the time to lock into a low rate. Last month, the US Federal Reserve boosted interest rates for only the third time in ten years. Historically, central bank rates move in tandem, which could suggest a similar move is imminent in the UK.
Rising inflation also indicates that rates may soon be on the up. UK inflation is currently the highest it’s been since June 2014, and some analysts expect it to rise further before the year’s end. Central banks typically raise rates if they’re concerned about rising inflation, so now may be the time to strike on negotiating a fixed-rate product that takes advantage of the low rates.
Remortgaging can have its drawbacks. New, stricter mortgage rules may mean you’ll be under more scrutiny from a prospective lender. You’ll also need to consider if early repayment charges are applicable, as this could outweigh your potential savings—particularly if you’ve only got a small amount left to pay. But if you can secure a deal with noticeably lower monthly repayments, now could be a good time to remortgage. Enness has a team of advisors who can work with you to discuss your options and ensure that you’re getting the best possible deal.