In over 30 years, we’ve not yet met anyone who takes joy in applying for a mortgage. Still, as Sales Director, landlord and experienced mortgage broker, Jeni Browne, explains, the top six reasons property owners put off remortgaging are really just myths!
I am sure that none of you, not even the most enthusiastic landlord or homeowner, has ever woken up – spring in your step – because you knew you had a mortgage application form to fill out that day. Perhaps that’s why a worrying 1.1 million people are sitting on a standard variable rate (SVR) (data from February 2022). As interest rates begin to rise with the increase in the Base Rate and the costs of living, there is no better time to remortgage than now.
Is it simply apathy that deters borrowers from checking if there is money to be saved? We think not. Our research shows several reasons why people avoid remortgaging, and we believe it’s time to address them; there are simply too many of you paying over the odds!
I’ll wait till my current deal has ended
Why?! While it may seem harmless to wait until your current deal ends to do anything, it still leaves you open to at least a couple of months paying more than necessary on the lender SVR. If you have money to burn, fine. If not, I strongly suggest organising your remortgage early so that your new mortgage rate starts as soon as the old one ends! With mortgage interest rates on the rise, now really is the time to assess your options.
I didn’t know I could switch to a new mortgage early
Not knowing how early you can organise your next mortgage rate is a fairly common reason for leaving it till the term elapses to remortgage. In fact, you can sometimes set up your next rate six months ahead! Typically, we’d recommend at least four or three months earlier, as this guarantees everything will be complete in time, and you won’t be rushing around looking for documents. Even if you want a product transfer, it’s better to do this ahead of time.
It’s easier to stay with my current lender
Arguably, yes. But easier and cheaper are not the same thing. If you’re staying with your existing lender but negotiating a new rate, then that’s certainly better than doing nothing. Product transfers are easy; however, it is always worth shopping around. We can do this for you (even easier!), and if your existing lender offers the best deal as a product transfer, we won’t charge you a fee for this. If you are better off remortgaging with a new lender, it’s up to you whether the long-term saving justifies getting the paperwork together.
Applying for a mortgage will involve an element of work from you. Likely, you will need to complete a form and collate several documents that prove your income and that you aren’t laundering money. However, unlike purchases, remortgages are a lot easier as there aren’t any external pressures (like property chains).
To make the process even easier, let us do the leg work! That way, beyond supplying us with the necessary documents, you’ll have minimal input, and we’ll ensure everything runs smoothly while you get on with doing things that do bring you joy.
There are lots of fees
Perhaps, and then again, perhaps not. There are a plethora of mortgage rates available; generally, those with higher fees come with a lower interest rate and vice-versa. Will paying those upfront fees save you money in the long run? Or are you better off with the mortgage with fewer (or no) fees? Ultimately, it’s a numbers game, and it’s entirely up to you. We can help lay out your options and give advice, which is very useful when there’s so much to choose from!
I don’t think I will save that much money by remortgaging
A little bit of (google) research on my part suggests that the average saving by remortgaging is £4,500 - £5,000. In reality, it can be considerably more. I’ve gone to the trouble of doing some maths to illustrate my point:
Your outstanding mortgage is £225,000. You’re about to roll onto your lender’s SVR of 4.24%, meaning your monthly interest payment alone will be £795. Assuming the SVR doesn’t change over the next five years (entirely possible), you would pay £47,700 in interest. Eek!
However, if you remortgage onto a new five-year fixed at (for example) 1.79% with a £1,995 fee, free valuation and free legals, your interest costs over that five-years reduce to £20,137.
Even with the £1,995 application fee, you’ll save £25,568. I don’t know about you, but I don’t know anyone who dislikes paperwork that much!
If you’ve got a remortgage coming up in the next six months, it’s not too early to start looking around at possible mortgage options. Life’s busy, so if you’d like an expert to do the hard work for you and research the whole mortgage lender market for the most suitable rates, give our team a call on 0345 345 6788 or email email@example.com.
This article was updated in March 2022.
24th March 2022