Switching at the end of your deal could save you thousands a year
If your current mortgage deal ends within the next six months, it’s important to start the remortgaging process without delay. The UK mortgage market remains unpredictable, so fixing a rate early helps protect you from sudden price increases. You can secure a new rate and review it regularly, allowing you to switch if a more competitive offer comes along before your current term ends.
Many borrowers delay taking action, believing they will find a new deal in the final few weeks. However, failing to act could result in you automatically reverting to your lender’s standard variable rate. These default rates are usually much higher than the best remortgage deals available, so a little early preparation can save you a considerable amount of money.
Can remortgaging save you money?
Securing a new deal when your current one ends could significantly cut your annual mortgage payments, potentially saving you thousands of pounds. Furthermore, your options might improve if your property’s value has increased over time. A higher property value positively affects your loan-to-value (LTV) ratio, meaning you own a larger share of your home outright.
This is important because lenders usually reserve their more competitive interest rates for borrowers with lower LTV ratios. As a result, the equity you’ve built in your property often grants you access to cheaper borrowing options, making it even more advantageous to review your mortgage deal when the time comes.
Choosing between fixed and variable rates
Choosing whether to fix your mortgage mainly depends on how much certainty you want in your budget. A fixed-rate mortgage ensures that your monthly payments remain the same for the duration of the agreed term, whether that is two, five, or ten years. While a longer fix offers protection against future rate increases, it also means you might miss out if the Bank of England eventually lowers the base rate.
Alternatively, tracker and discounted variable mortgages fluctuate with broader economic changes. If interest rates drop, your monthly mortgage payment will decrease. Some variable mortgages even have no early repayment charges, allowing you to switch to a different deal later without incurring a significant financial penalty.
Other reasons to review your mortgage
Besides securing a more competitive interest rate, there are several practical reasons to consider remortgaging. Many homeowners use the process to release equity for major home improvements, such as an extension. Others choose to consolidate existing debts into their mortgage, though it is important to remember this increases your overall borrowing and the total interest paid over the long term.
Before making any applications, ensure your finances are in good shape. Check your credit score, clear any overdrafts, and ensure all regular bills are paid on time. Since early repayment charges and changing criteria can complicate the process, seeking professional mortgage advice will help you find the most suitable deal for your personal circumstances. Your home maybe repossessed if you do not keep up repayments on your mortgage.
