2013: The year of remortgage?

Published: 25/02/2013

With interest rates at a record low in 2012, many homeowners can be forgiven for sitting tight and reaping the benefits of loosened purse strings. However, as both the property market and financial climate begins to stabilise, many homeowners are starting to see the benefits of remortgaging and locking in a fixed rate.

Remortgaging allows a homeowner to switch their current mortgage to another, typically to get a better mortgage rate. Initial activity indicates many are doing just that and here are the top 5 reasons why:

The threat of SVR hikes: We have already started to see lenders increase their standard variable rates (SVRs). While the increase may only be marginal at the moment, many in the industry expect this upward trend to continue thus impacting on millions of homeowners monthly payments.

New deals on the block: Fixed rates are currently at a record low; 2013 enjoying the arrival of many rates at 3% or less. These rates are however here to entice and may not be around for long.

The non-gambler: Despite the Bank of England base rate remaining at a historically low 0.5%, and experts predicting it to stay put for the foreseeable future, many homeowners are choosing to secure a fixed rate mortgage, perhaps learning from the last few turbulent years. After all the only way to guarantee your payment amount is to move on to a fixed rate.

Bend it like Beckham (or Bale nowadays!): Figures from the Council of Mortgage Lenders (CML) show over 30% of borrower have overpaid on their mortgage since 2005. However some mortgages don’t offer this degree of flexibility.

If you are in a position to overpay on your mortgage thus reducing your overall balance more quickly, speak to an independent financial adviser about remortgaging to a fully flexible deal.

I want to break free: The remortgage market has particularly struggled in recent years; the only decent deals available to homeowners with around a 40% deposit. Many other homeowners meanwhile have become mortgage prisoners, unable to raise the equity to lock in a new deal. However the government’s Funding for Lending Scheme (FLS) is now helping previously cautious lenders to expand their range and offer trapped homeowners a remortgage shovel.

As a leading national law firm we can provide the legal expertise to anyone looking to remortgage. We cannot however help you decide whether you should make the move and what deal to switch to. Anyone confused by their options should always seek the help of a professional independent financial adviser.

Content correct at time of publication