We’re all affected by the rising living costs that seem to be soaring every day. The rise in the Bank of England base rate, the increase in fuel prices, and the worrying prospect of rising energy prices are causing serious concern for many people.
This is a very distressing situation, especially as wages are not increasing in line with rising living costs. You may be worried about how you can continue to pay your mortgage repayments as well as juggling spiralling living costs. Your mortgage is likely to be your biggest expenditure, so it’s important that you carefully review your outgoings to ensure that you are not paying more than is necessary. You may find that by remortgaging to a new deal, you can reduce some of your outgoings which could ease any financial pressure.
At Mortgagemove, our team of experienced mortgage advisors can offer whole of market advice for first charge mortgages. For example, we can review your current mortgage and assess whether remortgaging to a new deal is the right option for you. To find out how we can help, please phone our freephone mortgage line on 0333 005 0333.
Could rising interest rates impact your mortgage payments?
In February 2022, the Bank of England raised the base rate to 0.5%.
For many people on a tracker mortgage or a standard variable rate (SVR), this increase could mean that your mortgage repayments could change. This is because your monthly repayments will align with the base rate. If this changes, you will have little notice of any increases in your mortgage payments. However, if you are on a fixed-term deal with a pre-agreed interest rate, the rise in interest rates will not impact you until you come to the end of your deal and switch to the SVR.
Ever since the banking crisis in 2008, many consumers have been happy to stick with tracker mortgages or remain on their SVR as interest rates remained historically low for a significant period of time. However, we are now entering a tumultuous period, so if you wish to retain control over your outgoings, now may be the right time to consider remortgaging to a fixed interest mortgage.
How can remortgaging reduce your outgoings?
It’s important to periodically review your mortgage details to ensure that you benefit from the right deal. Life can change significantly once you take out a mortgage; you could move jobs, start a family, or have additional financial outgoings. We always recommend taking time to regularly assess whether your mortgage deal is still suitable.
Remortgaging allows you to move from one mortgage deal to another. You can choose to remain with the same lender, or you could move to another mortgage provider. By remortgaging to an alternative deal, you may find that you can benefit from reduced monthly repayments, lower interest rates, or even reduce the length of your overall mortgage term. In addition, when you remortgage, you control how much you wish to repay each month. Therefore, remortgaging can be an excellent way of reducing your financial outgoings.
Our trained mortgage advisors are experienced in finding suitable remortgaging deals for our clients. We have access to mortgage deals from various lenders, not just the typical high street banks. If you are considering remortgaging to lower your repayments, please contact us. We can look at what deals are available and find something right for you.
Can you remortgage if you are on a fixed-term deal?
Yes, you can. People often wait until they move to a standard variable rate or are approaching the end of their fixed-term deal before looking at remortgaging options. They may wish to avoid expensive exit fees if they end their fixed-term prematurely. But, in some cases, it may be financially advantageous to pay the exit fees and remortgage to a new deal because the reduced payments could be significantly lower to justify paying the exit fees.
Any early repayment charges will depend on how long you have left on your current deal. When you speak to one of our mortgage advisors, we can calculate how much your exit fees will cost and weigh it up against any new product fees and reduced payments. From here, we can advise whether it is the right time for you to remortgage or whether you could be financially better off by staying on your current deal.
Are rising house prices a good reason to remortgage?
We are currently in the midst of a housing boom. The pandemic has caused house prices to rise quickly – as a result, your house may be worth much more than you originally paid for it. If this is the case, you could find that you have greater equity in your property that could move you into a different loan-to-value ratio. Even the smallest change could make you eligible for better interest rates and more affordable repayments.
Could remortgaging help you to cope with rising energy costs?
Many people choose to remortgage to free up equity from their home to pay for home improvements. In some circumstances, remortgaging can be cheaper than other forms of personal finance, including loans or credit cards. This is because the interest rates are typically lower.
When you switch to a new mortgage deal, you could apply to extend your borrowing, giving you the money to make improvements that could help you deal with rising energy costs. For example, you may wish to upgrade your boiler system, install new windows or doors, or even add solar panels to your home. These are all practical ways of making your home more energy-efficient and could help prevent your energy bills from soaring.
But it’s important to remember that if you are adding to the amount of money that you borrow, you will need to repay that money over the duration of your mortgage term. At first glance, it may seem cheaper to borrow £5,000 at 1.5% interest via a mortgage than £5,000 at 3% via a personal loan. But if your personal loan is repayable in two years, rather than the 20-25 years that you have left on your mortgage, you could be paying much less overall.
You may wish to look at green mortgages as part of your remortgaging plans
If you are serious about upgrading your home to be as energy efficient as possible, then you may be interested in the growing number of green home mortgages that are on the market.
Lenders are taking an active approach towards sustainability.
If your home has an EPC rating of A or B, you could be eligible for a green mortgage. This is where you could receive preferential interest rates or receive a one-off cashback incentive (often worth hundreds of pounds) if you are purchasing or remortgaging a proven energy-efficient property.
For example, Nationwide could give you as much as £500 cashback if you intend to buy a property that has an energy efficiency rating of 92 or above.
If you are looking to remortgage to release funds to pay for your green-related home improvements (such as investing in solar panels), then speak to one of our trained mortgage advisors. We know which lenders are offering green mortgage incentives specifically for energy-related upgrades, and we may be able to secure you a better deal.
It’s exciting to see many high street lenders are increasingly offering green mortgages. This is because they understand that they need to work with customers to make it as easy as possible for home owners to improve their energy efficiency ratings. It is also in their interest to help customers enjoy lower monthly outgoings, as it prevents the likelihood of defaulting on your mortgage repayments.
Our remortgage team could help you to reduce your monthly payments
We work hard to ensure that our clients are on the best possible mortgage deal for their lifestyles and budgets. If you are considering remortgaging to reduce your financial outgoings, please contact us.
We will take the time to look at the whole market for first charge mortgages to identify the right deals for you, whether that’s reduced monthly repayments, lower interest rates, or even deals that allow you to switch from capital repayments to interest-only options. Our approach is to do the calculations for you and help you understand what remortgaging means and how it could impact your monthly outgoings.
When you are happy with your remortgaging deal, we will manage the entire application on your behalf.
Why not make a short 15-minute phone call to our freephone mortgage helpline to get started? All you need to do is phone us directly on 0333 005 0333, or text ADVICE to 82228.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.