Interest rates have gone up three times since December 2021 and have moved from a record low of 0.1% to 0.75% in March 2022 with many experts predicting more interest rate rises to come in 2022. The way mortgage companies set their mortgage offerings is directly related to the Bank of England base rate so it is to be expected that mortgage interest rates will also rise accordingly. So, is it a good time to remortgage?
Well, the answer is that it depends on what mortgage deal you are on now. If like the majority of mortgage holders in the UK, you are on a fixed rate mortgage and it isn’t going to end anytime soon then the answer is that re-mortgaging probably isn’t in your best interest at the moment.
Fixed Rate Mortgages
If you are on a fixed rate and it is due to end within the next 6 months or so then it might be a good idea to look at remortgaging now. Typically, a mortgage lender will allow you to look at remortgaging several months early and will hold the rate for you until the end of your fixed term to save you having to pay an early redemption penalty. The only real risk is if rates go down in the meantime and are lower when you come out of your fixed term. You might then need to review your mortgage and potentially pay a second lot of fees for the new mortgage deal. Given the potential of interests rising even more, setting a fixed rate mortgage deal now might be a good option.
Standard Variable or Tracker Mortgages
For those who are on a standard variable rate or a tracker mortgage then there is a case for remortgaging, as interest rates increase and now might well be the right time to do so, if the experts are right and rates are set to continue increasing over 2022 and into 2023. When on a standard variable rate mortgage there will typically be no charges for changing the mortgage to a lower rate fixed deal but anyone looking to change should look at the mortgage charges as these can be substantial. Clearly the advantage of a fixed rate deal is that you know exactly what your monthly mortgage outgoings will be for at least a couple of years, which makes budgeting so much easier.
When considering whether it makes sense to remortgage it is recommended that you to seek professional mortgage advice as your circumstances will be unique and the guidance offered in this article might not be suitable for your individual circumstances.