Should I remortgage before my fixed rate ends?


Bank of England figures show that 67,200 new homebuyer mortgages were approved during the month of November. A pale comparison to the record 104,547 recorded in the same period last year. On the other hand, the statistics for remortgages appear to be trending in the opposite direction. A total of 41,642 remortgages were approved during the month, compared to a lesser 32,745 from November 2020.

Hidden behind the statistics are many opportunities to speculate as to why this may be. Although the most poignant reason is most likely to be a distinct lack of houses for sale on the open market. It is unsurprising that we have seen this decline as many of the would-be October and November borrowers had brought plans forward to make the most of the Stamp duty break, giving market analysts a tough time to figure out trends given the distortive effect this had.

So, with less opportunity to find a new home, many are turning their focus to their current properties and looking at ways which they can improve what they already have. This is unsurprising as life often moves on regardless as to whether the housing market is ready for it to or not. Families will inevitably grow and the need for more space becomes more of a necessity than a nice-to-have.

In some cases, this presents a problem as many borrowers find themselves ‘stuck’ in a fixed rate mortgage and would be landed with a hefty ERC (early repayment charge) if they wanted to move over to a new provider.
Despite this, a case could be made for making an early repayment if it proves beneficial to your situation. Given that UK property prices have increased by 11.8% this year alone, many borrowers may find that a straight remortgage could get them a better rate than they currently have and, in some cases, save them more money than they would pay out by redeeming their mortgage early.

In scenarios such as these you may be able to shave years off your mortgage whilst maintaining similar repayments or in some cases, borrowers have been able to increase their borrowing amount significantly whilst finding that their monthly repayments only increase by a nominal amount. This proves extremely useful if you need a large sum of money to make improvements to or extend your existing property.

You may even find that your existing lender can now offer you a ‘further advance’ on your existing mortgage product. This could give you the ability to draw down on your existing mortgage and fund any improvements, whilst side stepping an ERC all together.

Whether your goal is to save money, reduce your mortgage term, increase your borrowing, or just start planning your next move, speaking to an independent expert like those you will find at Prospect Tree Mortgages is the best way to ensure you are getting the very best advice. ​

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