This is the question on many people’s lips “Should I remortgage?”. With the interest rates at current levels, should you wait to see if they come down or should you remortgage now, before your fixed rate comes to an end?
Were you aware that you can apply for a remortgage up to six months ahead of your current deal coming to an end. If your current fixed rate deal is due to end within this timeframe then you should be thinking about your options, especially if you have less than three months left. While most mortgage offers are valid from between three-six months, they can take up to 30 days to come through so, if your current deal is due to end in six months, you can actually start taking advice and looking at the best deals seven months ahead of time.
What should you do next?
No one could foresee what would happen to the market and that interest rates would rise as quickly or as regularly as they did. You may have fixed a deal for two years thinking that you were safe. Let’s face it, everything has been stable for more than 10 years. Many will have taken out a 5 year deal thinking that they had ages before they needed to worry about looking at a new deal. Now, you are left wondering what you should do next?
Will interest rates continue to rise?
The honest answer is that no one can predict what will happen in the next 12 months, two years or five years. At some point, will we reach a point where they can’t go any higher and instead they start to come down again? Throughout history, there have always been periods of volatility and uncertainty in the financial markets.
But, once we ride out this storm, things will settle. We just don’t know when that will be or how long it will take. It’s probably fair to say that rates won’t start to come down just yet though and that you may want to look at fixing your mortgage for at least a two year period. There is a risk that after that point, rates may be higher again so you may want to look at a five year deal. “Should I remortgage or should I wait and see what happens?”
Wait unto the new year
If you are uncertain and would like a little more time, and you have six months or more left on your mortgage, then you have time to play with. Don’t leave it too long as new mortgages can take time to arrange and you don’t want to end up running out of time and your current deal moving to a variable rate. You could wait and see how the markets continue to perform and then wait until January to see what impact the recent budget has and whether inflation starts to ease.
Apply for a mortgage and wait before accepting it
This is another option however, you don’t want to be applying for multiple mortgages as this can affect your credit rating. An offer will be valid for three-six months however. You only want to choose this option if you aren’t going to incur any financial penalties. If you get an offer and the mortgage arrangement fee is added to the term of your mortgage which doesn’t end up going ahead, you should avoid having any fees to pay. Using a broker is a wise decision. They often get paid a fee by the mortgage company for arranging a mortgage so may not charge you to make an application.
There may also be the chance that once you have had a mortgage offer, rates may go down. This was certaInly the case recently when rates were reduced by lenders on some of their fixed rate products. Should you receive an offer and then rates change, you may want to consider your next move.
Consider a product transfer
A product transfer with the same lender is a good option too. It is worth investigating what options are available to you. There is far less paperwork and often the decision and process can be carried out entirely online. Have a look and see what options are available to you once you come to the end of your term.
It is impossible for anyone to say what will happen ultimately. Market suggestions that the fixed rate mortgage market has peaked despite there being the possibility of further Bank of England interest rate hikes. The average fixed rate for two year deals peaked in October at 6.41 percent with the average five-year fixed deal being 6.2 percent. Since the 11th November, lenders have been reducing their rates suggesting that the peak has already happened however, it would be remiss of us to suggest that this may not change again.
If you are thinking “should I remortgage?” and would like honest and professional advice based on your individual circumstances then it is a good idea to get the advice of a mortgage broker. We are happy to help and can be contacted on 01934 756717 where we can help you find the best solution for your circumstances.