New Year New Mortgage
Caz Blake-Symes • December 15, 2020
2021 – time to remortgage?
You should look to remortgage to a new deal when your current introductory mortgage rate is close to ending.
Nearly all mortgages have a headline offer that usually lasts for the first two to five years of your mortgage – but this period can be longer. Once that offer ends your mortgage rate will revert to the lender's standard variable rate, which will almost always be higher than what you were paying.
Remortgaging deals also have these headline introductory offers to entice customers to switch from their current provider. Therefore, remortgaging can be a great way to potentially save you from paying hundreds of pounds extra in interest each month over the next two years or five years. However, there are some drawbacks and potentially large fees to pay, which could end up making the remortgage a waste of time and money.
When and why should you remortgage?
When and why, you should remortgage can depend on a variety of factors. Even so, you should generally start looking for a remortgage deal around three months before your current one ends. This will give you enough time to do your research and complete the application process in time to make sure your remortgage deal begins just as your last deal ends.
If your current mortgage is on a fixed rate deal you will want to make sure that your lender's standard variable rate will not be a shock to your finances. If the Bank of England's interest rate has dropped since you took out your fixed rate, then you may not want to remortgage, unless you can still get a great variable rate or tracker deal elsewhere.
However, if the bank rate has risen during your fixed rate period, then you will likely want to get another fixed rate deal on a remortgage, which might keep you going on a similarly low rate. If you are on a discounted variable rate and the rates have risen dramatically, you probably will not feel the shock as your rate will have risen over that time too. However, you will probably want to move to a fixed rate deal.
How long will it take to remortgage?
Remortgaging to a new lender can take up to three months. If you are switching over from the same mortgage provider to just another one of their products, then it could take only one month.
Therefore, you should start the comparison and research process at least three months before your current deal expires. Give yourself time to weigh up your options and calculate all the costs.
Remember, with a remortgage there are still likely to be many of the same fees you had to pay when you took out your original mortgage. You may also need to pay early repayment fees as a penalty for paying off your old mortgage too soon.
Is remortgaging worth it?
Remortgaging can potentially save you thousands of pounds. All you need is your mortgage interest rate to rise by 1 or 2 percentage points and you could find yourself paying hundreds of pounds more every month.
After all, there are also costs to consider, and when they all add up, you probably still will not save money immediately. The benefits of remortgaging are likely to take a few months, or maybe even years.
Switching mortgage: comparing rates and fees
Generally, you should always compare interest rates first. Discounts on fees can be enticing, but mortgages are a long-term commitment, and therefore the savings can take time to truly make a difference to your bank account.
However, it is likely any new deal you move to is still on a short-term basis, so the fees associated with remortgaging should be seriously considered.
Make a comparison over the offer period and see how much the fees will impact your potential savings. If the potential monthly mortgage repayment savings still win out, then that's a good sign, but you should also check what the new deal's current standard variable rate is, in case you can't remortgage again further down the line.
When is it a good time to fix a mortgage rate?
The bank rate and other factors in the mortgage market are likely to influence your lender's standard variable rate. During good economic times, the bank rate generally stays higher than usual, and during bad economic times, the bank rate is usually low to encourage more lending and spending. If you suspect that the bank rate is about to rise, then that would be a good time to move to a fixed rate mortgage deal.
It is also worth considering if you are coming to the end of your current introductory mortgage deal. Chances are that your lender's standard variable rate will be higher than a fixed rate on another deal.
Should you remortgage with your existing bank or switch to a new lender?
Remortgaging with your existing bank is often easier as there is usually less paperwork to do. The process is also generally quicker and can sometimes be done in under a month. Your existing bank may also discount some of their remortgage fees.
However, switching to a new lender can offer up better deals. Banks are always competing for new customers. They want your business, especially when it comes to mortgages, so it is important to look elsewhere even if your current provider has a great deal on.
Your mortgage provider's competitors will often give you a better interest rate to draw you away from them. Whatever you decide though, make sure to compare all the deals available and try to use it to your advantage to get a better deal.
Let Bristol, Bath and Exeter Mortgages Online arrange your remortgage for you.
There are huge benefits in choosing an independent, whole of market, mortgage broker such as us to do all the research and administration for you. An experienced broker like us, has access to numerous mortgages and providers that are not available on the high street or via comparison websites. We will provide you with a full comparison report of the best mortgages available to meet your particular circumstances enabling you to make an informed decision.
The amount of paperwork involved these days is considerable when taking out your first mortgage or remortgaging. We have a team of expert administration staff and we will deal with this for you, saving you hours of your precious time and ensuring that everything is done precisely.
For further details about the services we offer as a fully independent mortgage brokers or any other mortgage information book your FREE CONSULTATION with one of our expert Mortgage Advisers please contact us
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.
Adapted from Zoopla’s April 2025 Housing report I mage: The analysis uses average house prices from the house price index and for first-time buyers to assess mortgage payments at different mortgage rates applied to a 30- year mortgage, at different loan-to-values. One emerging trend that we expect to positively support market activity in the coming months is a relaxation in how lenders assess the affordability of new mortgages. While buyers focus on the mortgage rate they will pay, lenders also check whether the borrower can afford a 'stressed mortgage rate' at a higher level than the borrower will pay. While the average 5-year fixed rate mortgage is around 4.5% today, many lenders are currently 'stress testing' affordability at 8-9%. This makes it harder to secure a mortgage without a large deposit. If average mortgage stress rates were to return to pre-2022 levels of 6.5% to 7%, this would deliver a 15-20% boost to buying power. An average first-time buyer with mortgage repayments of £1,020pcm at a 4.5% mortgage rate would typically have to prove they could afford monthly repayments of £1,550pcm at an 8.5% stress rate. If the stress testing is relaxed to 6.5%, repayments would fall to £1,275pcm, boosting buying power. It's a similar pattern for the average homeowner, while the actual impact will vary by lender and type of borrower. This change would consequently supporting demand and sales volumes, helping to clear the stock of homes for sale, rather than boosting house prices. Other existing rules and regulations that remain in place will continue to impact the availability of mortgage finance. Comment from Phil Clark “This is potentially very exciting news and will give borrowers a greater choice of products if these rules are relaxed. Regardless of whether you are a First-time Buyer, Looking to move, remortgage or invest in property, there are a huge range of competitive mortgage deals on the market. I will be delighted to discuss your specific requirements and offer you the most suitable deal!” Please call Phil on 0117 3251511 or email info@swmortgages.com For more information about the Mortgage and Protection products we offer, please visit www.bristolmortgagesonline.com Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
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