The mortgage sector has witnessed an interesting shift over the last few years. Sparked by an uncertain economic climate and looming Brexit complications, and encouraged by historically low borrowing interest rates, many people are choosing to renovate their existing homes rather than relocate, and as a result, the remortgage market is on the rise.
A remortgage can take many forms, including remortgaging with your existing lender at the end of a fixed term or remortgaging to a new lender. And those looking to raise funds through their existing property are also gaining traction. This could be to enable an extension or renovation or as a debt consolidation tool, but those taking out a second charge or seeking a further advance are becoming more commonplace. 2019 figures from The Finance & Leasing Association actually showed that second charge mortgages were up 24% year-on-year, which was attributed to the idea that people are improving rather than moving.
Positive Trends In Residential Remortgages
Happily, this shift is coupled with some positive trends, with some very competitive rates available for those remortgaging – many hovering around the 2% interest mark and some even lower in the case of a smaller loan-to-value. And many lenders offering a more flexible lending criteria than they were, say, five years ago. Five-year fixed deals are on the rise and there are even some 10 year options floating around. Why are these a popular option? Again, because of the current uncertain economic climate. With lenders trying to attract new customers there are also some interesting rewards up for grabs at the moment, with many lenders offering cash back upon completion and a valuation fee waiver, so looking through all the available options is key.
So, for those customers looking to remortgage, why is it important to engage a broker service? There is a tendency for customers who have been with a lender for a long period of time, and who have often been treated very well during that time, to not shop around. A remortgage broker has the luxury of viewing a case from an unbiased perspective. The broker will look at the existing lender’s options, but if there is an alternative option out there that will ultimately save the client money, they will find it. And if there is something unusual about the situation, they will use their expertise to deal with it. Whole-of-market brokers can examine all the available options and advise accordingly.
Know What To Look For When Choosing Your Remortgage Package
There are many pitfalls to avoid when it comes to renewing a mortgage. Customers should know in advance of their deal ending and look to find their remortgage option around three months before their current deal is due to expire. There are many horror stories in today’s climate, where customers are seeing their low rate jump to a 4-5% standard variable, which can result in hefty monthly increases. This is an avoidable situation if you are prepared and get in contact with your broker in plenty of time to enable a smooth application, valuation and paperwork transfer process.
It’s important to be aware of any applicable early repayment charges on an existing loan. As the term draws to a close these will often lessen and eventually disappear, but it’s always worth knowing exactly where you stand with the amount payable. There are cases where a high interest rate coupled with a scalable early repayment penalty can mean accepting the penalty and moving on to a lower rate is actually the more advantageous option. Again, an experienced broker will help present the facts clearly and assist you in making your decision.
So whether you are looking to borrow more money, release equity, consolidate debts or simply move to a better deal and reduce your monthly outgoings, a sensible remortgage strategy can prove invaluable. To find out more, contact one of our residential remortgage brokers today on 020 8660 8613 or email email@example.com.