Is your fixed-rate mortgage expiring soon? Borrowers may be hit with much more expensive monthly repayments, in light of the explosive increase to mortgage rates seen in 2022 and 2023. Rates are now beginning to fall, but they are still far above the levels seen in 2021. But there are various levers you can pull on to optimise mortgage costs when remortgaging:
Optimise your loan-to-value
The loan-to-value (LTV) measures the size of the loan compared to the total value of your property. The lower the LTV, the better the mortgage rate (up to a point). Market-leading mortgage rates are normally available for LTVs of 60% or lower. Obtain an up-to-date valuation if you have made substantial home improvements.
Choosing the right mortgage
Choosing the mortgage type (fixed versus variable) or the length of a fixed-rate period can be a daunting task, but a mortgage adviser can help you make this key decision by highlighting rate comparisons, and the advantages and drawbacks of different products, allowing you to make an informed decision on the best fit for your needs. In some circumstances it may be possible to lengthen the mortgage term and reduce monthly repayments, subject to a full lender review of your finances.
Finding the cheapest lender
Once you have optimised your LTV threshold, and the mortgage type and terms, it’s time to secure the cheapest deal. Significant sums can often be saved by switching to a new lender, rather than selecting a different product with an existing lender. Make sure to consider arrangement fees and other conditions (eg. early repayment charges). An experienced mortgage adviser can compare all-in-costs and may have access to exclusive deals.
Timing is key
You can normally secure a new deal up to six months in advance, so getting ahead of the game is important to avoid the possibility of ending up on expensive standard variable rates. Some mortgage advisers will monitor a rate locked in in advance, to see if it can be improved with the lender before the new mortgage starts. This could save substantial amounts in a falling rate environment.
Is your fixed-rate mortgage expiring soon? Our mortgage experts can advise you on your options, and help find you a suitable rate. Call 03300 564 446 for more details, or get in touch using our contact form.
This article is for general information purposes only and does not constitute financial advice or a personal recommendation. Your home or property may be repossessed if you do not keep up repayments on your mortgage. Mortgage availability and terms depend on your individual circumstances and are subject to lender criteria.
