Should I remortgage before my fixed rate ends?
What the stats are saying…
Bank of England figures show that 67,200 new homebuyer mortgages were approved during November 2021. 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.
Why could this be the case?
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.
What can I do?
In some cases, this presents a problem as many borrowers find themselves ‘stuck’ in a fixed rate mortgage. Redeeming a mortgage early could land you with an Early Repayment Charge.
Despite this, a case could be made for making an early repayment if it proves beneficial to your situation. UK property prices have increased by 11.8% this year alone so 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.
What are the benefits?
In scenarios such as these you may be able to shave years off your mortgage whilst maintaining similar repayments. Borrowers have even 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. By doing so you would be side stepping an ERC all together.
Regardless of your goals Prospect Tree Mortgages are here to help you achieve them. Contact an expert today and find out what you can achieve.