Marty Naan talks us through our remortgaging options [This podcast was recorded in July 2023].
My mortgage deal is coming to an end. What should I do?
Because of all the recent changes in the market, it’s more important than ever to get qualified expert advice about what you want to do next.
You can speak to your existing lender about a remortgage, but they’re only going to be able to speak to you about their own deals. That’s quite restrictive and limited. You won’t know if there’s something better there for your needs unless you speak to an advisor, as we are able to check literally thousands of options to find the one that suits you best.
Is now a good time to remortgage?
I don’t think there’s ever a bad time to remortgage. The critical part of a remortgage is that it means you avoid moving to a lender’s standard variable rate.
It’s true that interest rates are currently higher than they have been in many years. But you can also be sure that the highest rates of all will be the standard variable rates. Remortgaging deals with that situation as soon as possible instead of wasting money on a higher interest rate.
If I could give one bit of advice to people, it would be not to let mortgage lenders control your finances. It’s your money – you should choose how and where you want to spend it.
How quickly can you remortgage?
Traditionally, mortgage advisors say you should begin the remortgage process six months before the end of your current deal. I like to be awkward – I would actually say seven months.
A new mortgage deal can be ready and waiting for six months, so you should spend the extra month doing the initial work: the research, deciding how to proceed and ensuring that your application is complete.
If you allow seven months, all that administrative work is done in plenty of time. Once that six month window opens up, your new mortgage offer can be ready to begin.
Can I remortgage before my deal ends?
Yes, you can but it doesn’t come without potential drawbacks. It all comes down to whether you can exit your current deal without paying any charges. If you can, and you want to secure a new deal now, you can proceed. However, in all likelihood your existing interest rate will probably be lower than current deals.
If you wanted to secure a new rate ahead of further increases, again, you could do that – but you would risk moving from a low rate to a higher rate.
If you have to pay a charge to exit your current deal then those options are still available, but you would need to determine how much it would cost to remortgage early. There’s a lot of factors to consider.
Thankfully, all these variables are carefully considered by an independent mortgage advisor as part of the advice process. So if you take one thing away from this, remember that you’re not alone. Don’t be afraid to ask for assistance. It’s more important than ever to make sure that you’re getting the most appropriate deal for the foreseeable future.
Can I move to a new rate when my current mortgage deal ends?
You can choose a new rate with your existing lender – which means that you’re not doing a full remortgage but what’s known as a product transfer. However, it’s a bit limiting as no other changes are allowed in this instance.
Or, you can do a full remortgage to a different lender and you can change various different options with your mortgage. That’s what I was referring to when I talked about starting seven months ahead – if you’re remortgaging to a different lender you’ll have time to decide exactly what you want.
Can I extend my mortgage term?
If you want to extend your term to make sure your new payments will fit with your budget, you can do that via a remortgage with a new lender. However, I would not make that decision lightly.
Extending the term means that it will take you longer to repay the mortgage. The total amount of interest you would pay will increase as well.
So the critical point here is that before you extend the term, make sure that you’ve considered all of the options available. If you don’t know those options, now is the time to speak to a mortgage advisor.
That’s absolutely the first thing you should do. The more information you have, the better decisions you can make.
Can I fix my mortgage with rates increasing? How long should I fix my mortgage for?
I would love to be able to look into a magic crystal ball and tell people how long to fix for. But the reality is that everybody is different and has unique circumstances. So while a two-year fixed might suit one person, it might not suit the next person for entirely different reasons.
Shorter term options traditionally give you cheaper fixed rates. Although currently in July 2023, the shorter term options are actually more expensive.
With a shorter term you would need to review your mortgage again in a rapid time frame. If interest rates do go up in that interim period you could end up paying even more. If you don’t want to risk that, and prefer not to worry about how much you’re paying for a longer time, then fix it for longer.
Please don’t take this as advice – what I’ve said doesn’t take into account anyone’s circumstances, preferences or needs. I would need to speak to you and find out your goals before I help you decide which rate option is best.
Will mortgage rates go down this year, in 2023?
Honestly, who knows? Anybody that claims to know when rates might go up or down is just making an educated guess, at best. The truth is that nobody can answer that. I wish I could – I’d be a lot richer.
Just bear in mind that there’s a lot more to sorting out a mortgage than just picking out an interest rate. There’s a wide range of things that we look at when we’re trying to find the best mortgage for somebody. It’s not always about the interest rate, so speak to an advisor and look at all of the options before you decide what to do.
Is there a theme developing here?
Yes, the theme is that people need advice. Mortgage and protection advisors are there to give that advice and they’re absolutely worth their weight and gold at the moment.
They have one job, which is to make sure that people are looked after and get everything they want at the end of the process. Please don’t be afraid to reach out and ask, because that’s what we’re here for.
Can I remortgage with credit card debt?
Yes, absolutely. You can also make a choice on whether to remortgage and leave the debt if you find it manageable, or you could remortgage and borrow some extra funds to repay that debt. This can apply to other types of debt too – personal loans, store cards, etc.
There are implications to securing previously unsecured debt like a credit card or a personal loan. So if it is something that you’re interested in, please speak to an advisor to ensure that you understand the pros and cons of doing such a thing.
Can you remortgage with a Help to Buy loan?
Yes, you can, is the simple answer. But like every mortgage there are certain conditions to be aware of. Again I would seek the assistance of a qualified mortgage protection advisor. Not all lenders can actually do a Help to Buy remortgage.
If you currently have a Help to Buy loan, you need to think about whether you would like the loan to continue as is, or if you want to borrow additional funds to repay it.
You also actually need to apply for permission to remortgage a Help to Buy a loan which is a process in itself.
What else do we need to know about our remortgage options?
Imagine you had access to a full resource of knowledge, experience and skills that would help you put together a plan of action and guide you through the process from start to finish. I imagine most people would be happy to pay for a service like that.
It turns out you can. That’s what a mortgage advisor does. They don’t just pick out an interest rate, collect some documents and send them to a mortgage lender. It’s an expert service. It’s designed not only to make life easier for clients, but also to ensure they get the outcome they want – and not just to have to settle for something at that time.
An advisor is there to find the right deal for your particular situation by looking at hundreds of lenders and thousands of products. Aside from making sure that the mortgage is looked after, they can also look after your Will, review your protection and arrange any new cover needed. They can even review household bills to see if any money can be saved there.
So please don’t underestimate the value of having a mortgage advisor in your corner.
Think carefully before securing other debts against your home.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Your home may be repossessed if you do not keep up with your mortgage repayments.