We’ve lived in our house for 10 years and have a current mortgage. With the increases in house prices over the past six months, I’m wondering if it might be worth remortgaging at this point. Are we likely to get a better rate? We don’t want to increase our borrowing, but it would be good to reduce our monthly repayments, if possible.
Diane Fish of Smith & Pinching responds:
It is certainly a good idea to review your mortgage arrangements regularly – ideally every two to five years – to see if you can get a better deal. The first review often happens when you reach the end of a benefit period such as a fixed rate, but whatever arrangement you put in place should be reviewed on an ongoing basis: what was appropriate for your circumstances 10 years ago may no longer be suitable for you now. It always amazes me that people review the premiums they pay for their house and car insurance but rarely review their most significant monthly expenditure – their mortgage repayments.
I can’t say for definite if you can get a better deal without looking at your existing mortgage contract, but there may well be ways that we can reduce your monthly outlay, such as extending the term, as well as looking at a lower interest rate. Mortgage rates 10 years ago were changing on a regular basis and there were a number of fixed-rate deals around that became expensive once their initial fixed-rate period had ended.
When looking at rates and deals, it’s important to compare like for like: rates, criteria and products are changing all the time. Currently, two and five-year fixed rates are very competitive and popular given the current long-term uncertainties due to the pandemic.
It could be you need flexibility for future life changes, so ‘porting’ and ‘overpayments’ could be important. It’s really important to shop around, as rates vary from lender to lender. An independent mortgage adviser will do all the work for you and will look at what suitable deals are available. He or she may also potentially locate deals that are not accessible by individuals – although you should note that there may be deals available direct from lenders that an adviser does not have access to.
Your home may be repossessed if you do not keep up payments on your mortgage. There will be a fee for the mortgage advice. The precise amount will depend upon your circumstances, and the type of lending taken. Smith & Pinching’s minimum advice fee is £700. Any opinions expressed in this article do not constitute advice.
For more information, please visit www.smith-pinching.co.uk
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