With the cost of living and interest rates on the rise, you may be looking for ways to cut your monthly expenses. As mortgage payments are likely to make up a large part of your outgoings, remortgaging to a better deal could save you money – sometimes thousands of pounds a year. However, remortgaging isn’t the right choice for everyone all the time. Switching your mortgage at the wrong time or to the wrong deal could actually cost you money. That’s why we wrote this guide to explain four scenarios where you could potentially save money on your mortgage. If any one of these scenarios applies to you, remortgaging might be an effective way to reduce the cost of your mortgage, but be sure to book in for a FREE initial consultation to see what options are available to you so you can make an informed decision.
Scenario 1. Your current deal is about to end
If your fixed-rate or tracker mortgage deal is about to end (usually after 2–5 years) you may be able to save money by remortgaging. If you don’t remortgage, your lender will likely move you onto their higher Standard Variable Rate (SVR) and your monthly repayments could increase significantly. If you still have a fairly large balance left on your mortgage, you can expect to be paying hundreds of pounds more each month on your lender’s SVR. Speak to a mortgage advisor to find out what rates are available to you from other lenders – preferably at least 3 months before your deal ends to give your advisor enough time to switch you to a better deal before your repayments increase.
Scenario 2. Interest rates have risen
The Bank of England could increase the base rate further in the coming months and years, and if this happens you may be able to save money by locking in a relatively low fixed rate by remortgaging. When the base rate increases, mortgage rates rise accordingly. If you are on a tracker mortgage or your lender’s SVR then you’ll likely see an immediate increase in your monthly repayments. If you are on a fixed-rate deal, you won’t immediately be affected but when you do come to the end of your deal, mortgage rates may be higher than they are at present. It’s important to be aware that when ending your fixed-rate or tracker mortgage early you may incur an early repayment charge and/or exit fee. So you should speak to a mortgage advisor to work out if locking in a new deal at today’s rates will be appropriate to your individual needs and circumstances.
Scenario 3. Your home has increased in value
If your home has increased in value since you took out your mortgage, you could now be in a lower Loan to Value (LTV) bracket and have cheaper deals available to you. Loan to Value represents how much of your property’s value is covered by your mortgage, and it’s displayed as a percentage. The lower your LTV, the more equity you own in your property, and generally the less perceived risk you are to mortgage lenders. You could potentially take advantage of an increase in property value by remortgaging to a better deal or by releasing cash from your home. You should speak to a mortgage advisor so you can understand the implications of switching to a new deal or borrowing more, and to see what other options are available to you.
Scenario 4. You want to pay off your mortgage sooner
The sooner you pay off your mortgage, the less interest you will pay overall. However, some mortgages restrict overpayments or don’t allow them at all. If you have inherited some money or earned a pay rise since taking out your mortgage, you may want to overpay your mortgage each year or reduce the term. Speak to your lender or check your contract to see what flexibility your current deal allows you. If you are restricted from paying off your mortgage as soon as you would like to, remortgaging to a more suitable deal could save you thousands of pounds in interest over the term of your mortgage. As always, chat with an advisor to figure out your options and to ensure you find a deal that allows you to achieve your goals.
The Bottom Line
If you’re looking to reduce your bills, switching to a better mortgage deal could deliver some of the biggest savings – potentially thousands of pounds a year. For other ways to reduce your bills or to make your home more eco-friendly, please read our guide, ‘How Can I Save Money on My Energy Bills?’ Remortgaging isn’t always a money-saving exercise, but if one of the scenarios described in this guide applies to you it’s certainly worth exploring your options with a mortgage advisor. Just like switching to a better car insurance or broadband deal, seeing what mortgage rates are available to you from other lenders could be one of the most financially savvy things you can do as a homeowner.
We’ve been helping our local community with remortgages for over 30 years! We search thousands of products to find a deal that suits your needs. We also guide you through the process and liaise with all parties to ensure your remortgage goes smoothly.
Book your FREE initial consultation with one of our friendly advisors to get going quickly. We have offices in Frimley and Basingstoke, or we can help you remotely via phone or video call if you’d prefer. We look forward to chatting with you!
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Think carefully before securing any other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage.
