Why it might be time for you to remortgage
Rates are currently at rock-bottom lows amid as base rates remain at record lows
![Mortgage applicants to face tougher screenings](https://cdn.mos.cms.futurecdn.net/9QX4re67uNJcP7dJ6pec2K-415-80.jpg)
Mortgage approvals hit a two-year high in January as borrowers leapt to take advantage of rock bottom interest rates. The total number of loans approved rose to 74,581, up from 71,335 in December, according to figures from the Bank of England.
Within that number and while many of us were still recovering from the Christmas festivities and ploughing ahead with our new years resolutions, 42,228 homeowners got their paperwork together and took out a new mortgage on their property.
If you are smart, and aren’t locked into a mortgage deal with hefty early repayment charges, you’ll follow that lead and remortgage too. A combination of factors mean mortgage interest rates are ridiculously low at present - and if you are paying more than 2% interest you should look to see if you can get a better deal.
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The best rates available
Homeowners have already benefitted from a long period of low mortgage rates. Seven years of rock bottom charges have saved us more than £150bn in interest, according to figures from the Resolution Foundation.
“The Bank of England's decision to cut rates from 5% to 0.5% between October 2008 and March 2009 has saved households between £22bn and £24bn a year on their home loans,” says Tom Knowles in The Times. Save yourself even more by jumping onto one of these great rates.
Row 0 - Cell 0 | Provider | Rate | Fee | Maximum LTV |
Two-year fix | Yorkshire Building Society | 1.14% | £1,475 | 65% |
Five-year fix | HSBC | 1.99% | £1,499 | 65% |
Ten-year fix | First Direct | 2.89% | £0 | 60% |
Don’t forget about fees
When you are looking at mortgage deals don’t forget to factor in the fees when considering which deal is the best for you. Many lenders will offer a low rate product to get to the top of the best buy tables but they’ll whack a sizeable fee on it so they are still making a decent profit. Moneysavingexpert.com has a great calculator where you can put in the details of two mortgage deals, including the fees, in order to see which is cheaper over the mortgage term.
Deal running out? Act fast
Is your current fixed rate deal going to run out in the next few months? Start looking into remortgage offers now or you could face a shocking bill rise. That’s because when your fixed rate deal ends your lender will move you onto their standard variable rate (SVR). With fixed rate deals having been so low for the past few years the jump up to the SVR - which will probably not have come down much in recent years - could have a significant effect on your repayments.
“Anyone who fails to switch to a new deal in time is likely to see their monthly bills rise by at least a hundred pounds while they scramble to sign up to an alternative deal,” says Neil Simpson in The Mail on Sunday. “Worst hit will be those who took out hugely popular two-year fixes in late 2013 or early 2014.”
At that time anyone with more than 25 per cent equity built up in their home would have been taking out deals with rates of around three per cent. But, SVRs are currently sitting at 4.82 per cent on average, with some as high as six per cent.
If your deal runs out in the next two to three months approach your lender to see what new deal they can offer you. Then compare it with the rest of the market. Most lenders will let you sign up to a new deal up to six months before you actually want to move your mortgage on to it. Just put the end date of your current deal on the application forms and the money will be transferred the following day.
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