Remortgaging – everyone is doing it these days, but why?
24th January 2017
Given the prevailing sense of uncertainty that has been driven by Brexit negotiations and such like, we have been approached by many borrowers who want to investigate what all this means for their mortgage and whether they can save money by switching on to a new deal.
In Fact, the Council of Mortgage Lenders, (CML), suggest remortgages were up 13% year on year in November.
Much of the talk has been around whether or not we have seen the low point where interest rates are concerned, mainly because the cost of funds for lenders have increased. SWAP rates, upon which lenders price their fixed rates initially fell dramatically, but have started to ease upwards once more.
At the end of April 2016, 5-year money stood at 1.14%, but then dropped to 0.56% by September. Now this has increased once more to 0.92% showing that perhaps the low point is behind us.
However, this ignores the one thing that drives rates with almost as much effect where pricing is concerned; competition.
With lenders at pains to make a mark we have seen some buck the trend and continue to offer highly competitive products, whilst in the background continually tweaking their criteria to get more business in.
At present therefore, whilst the “ridiculous” rates of a few months ago seem to have disappeared, there are still some exceptional products around.
For those with at least 40% equity in their home, two year fixed rates from 1.19% (3.40% APRC) are available from a brand new lender, Atom Bank, who Coreco are proud to be amongst the first limited pool of brokers to gain access to.
Five year fixes too, are still great value and are available from just 1.79% (3.36%) and for those who want even more security, ten year fixes start at 2.59% (3.03%).
Even those with only 10% deposit or equity have seen the cost of rates fall and it seems remarkable that borrowers can now obtain a 90% Loan-To-Value mortgage from just under 2%.
Whilst there has been a lot of talk about the difficulties of remortgaging in the aftermath of the Mortgage Market Review and the extra hoops borrowers now have to jump through, the reality is that for those with a good job, credit record and equity in the property there really is no reason to worry. Obtaining a remortgage is still straightforward with lenders falling over themselves to get this type of quality business.
For those who think they are in a more difficult position it is still worth taking professional advice on your options as lenders recent criteria tweaks means that there are now more options available for those trickier borrowers. Those with an interest only mortgage, or who are contractors, freelancers or self-employed, now how much more choice available.
Also, there are more options available for borrowers who are worried that age will count against them, as in recent weeks many lenders have increased their age limits.
For those coming to the end of their current deal or who have not done anything recently, the decisive moment seems to be upon us.
Borrowers looking at switching on to a new product should first find out exactly what their existing lender would offer them and then speak to a professional broker to compare that to the rest of the market.
With most remortgage products offering a free valuation and free legals, plus the ability to switch on to a cheaper product if one appears prior to completion, it looks like a good opportunity to lock in now.
Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495.
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Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008", "Best Press Spokesperson" in 2011 and is the current holder of the British Mortgage Awards “Best Marketeer” title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.