Many of us are breathing a huge sigh of relief as we emerge from the covid pandemic but as we do we face the problem of the rising costs of living. The huge hike in utility bills, food, materials, properties (the list seems to be endless) and it will certainly effect most of us.
Now I can’t help you with the general cost of living but I absolutely can help you when it comes to your mortgage.
You can wait until your current mortgage rate ends before looking for your next one and go on to your lenders variable rate, but you have a couple of options to potentially save you hundreds of pounds.
Stay with your current lender. This is what we call a ‘product transfer.’ This is suitable for anyone who doesn’t want to make any changes to their mortgage. These changes include things like; Borrowing any more money, borrowing less money (paying off a lump sum) or changing the term of the mortgage (the time frame in which you repay the money). By taking this option you might not get the best rate though. Usually however, you will get a better rate elsewhere as a new customer. There is unfortunately no reward for loyalty in this game! If you stick with your current lender, you will usually only be able to secure your mortgage and new interest rate 3 months in advance.
You can apply for a new mortgage with some lenders 6 months in advance. This can be helpful if you want to lock in an interest rate if you’re concerned they will rise even further in the months ahead. You will have peace of mind knowing which interest rate you’ll be on and knowing exactly what your repayments are going to be. You can get your
application completed and it doesn’t have to take effect until 6 months time. This can be of great benefit if interest rates go up within that time – as they may well do! This is a hugely useful strategy as there is a risk if you leave your mortgage you could end up paying a higher rate, so by fixing yourself in 6 months ahead you could save money in the long run.
Changing lenders comes with other advantages too. As a new customer you will usually get a better deal – however it is important to note this is not the case with all lenders. You also have the option to potentially borrow more, maybe for those home improvements or that extension you’ve been dreaming of! Or perhaps you want to change the term to alter your repayments?
Some of my clients who are not actually due to renew their mortgage for 12 months or even longer, have asked me if they can do it now in case rates continue to increase.
There is usually a penalty for changing your mortgage early but in some cases that may be worth the cost of the penalty in the long run. Then you can reset for 5 years or even 10 years on a new fixed rate (although 10 year rates do tend to come at a higher rate in the first place). I always ask; what is this new stability worth to you? And only you can answer that one!
If you want to go through any figures or explore your options then do get in touch for a confidential but friendly chat any time and make sure you make the most of these rates right now, before they potentially go up even more.