Autumn has arrived and with it the sense of something hovering over the horizon – no, not Christmas, something more exciting… peak re-mortgage season. The next few months often see increased demand for re-mortgages and this year may be even busier due to the pandemic. Now is the time to start doing your research.
Around this time of year, you will hear the phrase “we’d like to be in by Christmas” from people buying houses, you may even have said it yourself. This is one reason why autumn and winter see a high number of cessations, or in other words, many mortgages come to the end of their initial term of two, five or however many years. When this happens, your interest rate will switch to the Standard Variable Rate (SVR).
The SVR is often higher than your initial rate, meaning your monthly payments could increase. Think of it as the mortgage equivalent to Amazon giving you the first three months of Prime half price. Once those months are up , you will be paying the standard subscription.
Re-mortgaging can be a way of saving money on your monthly repayments. You could see a more significant reduction if you have saved some pennies during lockdown and can pay off more of your loan – although this could incur an early repayment charge, so check your paperwork.
By re-mortgaging, you could switch from a tracker product with variable payments to a fixed rate option where you pay the same each month. These benefits might sound especially appealing in the current climate where unemployment is on the up and finances are being squeezed.
The coronavirus pandemic has made lots of things more complicated and re-mortgaging is one of them. But, don’t despair yet!
Many mortgage lenders have introduced policies about applicants who are or have been on furlough, and placed restrictions on loan to value, use of overtime income and bonuses and have made things especially restricted if you are self-employed. However, in many cases you can arrange a product transfer with your current lender without such policies applying to you. This might be frustrating if your current lender does not offer the best deal but it’s likely to still be better than switching to the SVR.
If you are not sure about your options and your eyes are glazing over at the mere thought of interest rate comparisons, you may want to speak to your adviser.
We can help you find the best option for your circumstances and guide you through the process. Whether you decide to speak to us, or handle matters yourself, you should get started sooner rather than later.
Typically, re-mortgaging can take four to eight weeks. However, in the current post-lockdown, pre-Christmas busy period it could take longer. Some lenders are taking up to 2 months to process and underwrite a mortgage application. It is best to get ahead of the game.
Your home maybe repossessed if you do not keep up repayment on your mortgage.