Homeowners across the UK have yet again been granted a rate rise reprieve. However, the sigh of relief may be short lived as following the Bank of England’s recent decision to hold interest rates at 0.5% for another month, it is now being widely predicted that there will be a rate rise in the second half of 2018.
According to the Bank of England, 43% of homeowners are still currently on variable or tracker mortgages, so for those who haven’t yet considered reviewing their current deal, the decision to hold at 0.5% may be the gift of time.
So with an interest rate rise almost certainly on the cards in the coming months, what should homeowners be doing in order to get a new mortgage deal in place and avoid an increase in monthly repayments?
Check your current deal:
Speak to your current lender or broker as soon as you can before you start the remortgage process to establish exactly how much you owe on your existing mortgage and also to request a copy of your mortgage statement so that you’ve got your mortgage account details to hand, as your adviser will need these details for your new remortgage application. It’s also advisable to check with your existing lender to determine whether there are any early repayment charges (ERCs), and if so how long it will be before you are able to repay the mortgage without incurring charges. Most lenders will allow you to secure a new deal up to six months before your current mortgage deal ends, so even if you have ERCs to pay it’s still worth exploring your options.
Check the value of your home:
If it’s been a while since you last reviewed your mortgage, your property may have increased significantly in value especially if you have carried out improvements. Getting it revalued may improve your loan to value ratio (LTV) and therefore give you access to a wider range of mortgage deals.
Remortgage:
If you are currently on a variable or tracker mortgage reviewing your options now may not only help take control of your monthly repayments in the short term but also help you to avoid an increase should a rate rise become a reality as predicted later this year.
Get remo ready:
The main thing that will slow down your application is not having all your documents ready for submission to your broker or lender, so if you can ensure you have everything to hand before you start, that’s going to help your chances significantly in terms of achieving a swift remortgage, which can be achieved in many cases within three weeks, but only if you’re organised.
Check your credit score:
Even if you already have a mortgage, when it comes time to remortgage a Lender will still check your credit score. In fact this is one of the most important things that a Lender will look at when you apply for a mortgage. The higher your credit score is, potentially the better chance you’ll have of being able to access a wider range of products and better rates. That’s why it so important to understand as soon as possible what your credit rating is, and if necessary, take steps to improve it if possible. Simple things, such as having a landline phone number and being registered on the Electoral Roll can greatly improve your credit rating, as can making more than the minimum monthly payments on your credit card. If you do have an impaired credit rating, it may still be possible to secure a remortgage deal, but it will make the process quicker if you mention this as soon as possible to your adviser so that they can advise the appropriate course of action and look at lenders who are sympathetic to customers in those circumstances.
Important information
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
You may have to pay an early repayment charge to your existing lender if you remortgage.