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Are you ready to remortgage?

Are you ready to remortgage?

Category: Mortgages

Updated: 13/09/2010
First Published: 13/09/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of England might have kept UK interest rates on hold at a record low of 0.5% for the eighteenth month in a row, but one thing is certain: when the powers that be decide it is time for a change, the movement will definitely be up.

Hundreds of thousands of mortgage borrowers have been benefitting from low mortgage repayments over the last year and a half.

Many of those that have seen their mortgage deal come to an end in that time have merely reverted to their lender's standard variable rate (SVR), and been rewarded with lower monthly repayments as a result.

However, once the base rate does start to rise, SVRs will inevitably follow and it is almost certain that the cost of even the best mortgage deals in the market will start to rise too.

For some borrowers, staying on their SVR could well remain the best option for a good while yet.

For others, however, now might be the time to consider remortgaging to a new mortgage deal.

On top of offering the possibility of reduced mortgage repayments, remortgaging can also be a useful method of raising money for home improvements, or perhaps a family holiday or new car.

In some instances, it might even be possible to raise some extra cash, yet still end up paying less in monthly repayments.

People with other debts around their neck might also do themselves a favour by combining them all together under their home loan.

Although the mortgage rate will play a major part in whether the time is right to remortgage, other factors need to be taken into account too.

Arrangement fees, valuation fees and legal costs are all important considerations, while it is possible there will be exit fees to leave an existing mortgage deal too.

Thought is also required as to the type of mortgage deal that a borrower wants going forward.

Fixed rate mortgage deals guarantee a certain rate will be payable for a set period of time. For instance, ING Direct currently offers a top notch fixed rate mortgage deal fixing the rate of 2.99% to 30 November 2012. The deal is open to those remortgaging with at least 25% equity in their property and has an arrangement fee of £750 and booking fee of £195.

On the other hand, the rate payable on a variable rate mortgage will vary, usually moving in line with changes in the base rate.

A good example of a variable rate mortgage which will vary over the remaining term of the mortgage is the 2.19% variable rate currently offered by HSBC. It is open to borrowers who have at least 40% equity in their homes and has a booking fee of just £99.

If you've only got 35% equity in your home, then first direct offers a similar deal which is currently at the rate of 2.59% and also has a booking fee of £99.

Whichever way you decide to go, the key to successfully remortgaging is to shop around for the right deal.

If you can't find what you are looking for in our Mortgage Best Buy charts, why not get a free no obligation mortgage quote with our partner Mortgage Solvers.

They will make sure you can get expert help and advice to find the best mortgage deal to suit your individual needs.

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.